Biggest Impact in Decades: How US Sanctions Are Weakening Russia's Influence in the Balkans

The United States' decision last month to extend sanctions against Russia's oil sector had swift consequences in Bulgaria, where one of the companies targeted, Lukoil PJSC, owned the country's largest refinery. The situation illustrates how close economic ties with Moscow continue to affect political decisions in the region, notes Bloomberg.

The Serbian government is analyzing the possibility of buying Naftna Industrija Srbije (NIS) from the Russians/FOTO:A

The Bulgarian government decided to take control of the Neftohim refinery, located on the Black Sea coast, as well as other assets of Lukoil. The shareholders were left without rights, and the authorities appointed an administrator in charge of negotiating the possible sale. The specialized parliamentary committee approved the measure in 26 seconds, at a time when the expiration of the deadlines imposed by Washington was becoming imminent.

This development represents the most significant setback of Russian economic influence in the Balkans in recent decades. New restrictions imposed by US President Donald Trump's administration against Russian oil companies are undermining structures that for years have underpinned Moscow's presence in a region traditionally contested between East and West.

Pressures growing in Belgrade as well

In Serbia, the government is looking into the possibility of buying Naftna Industrija Srbije (NIS), a company currently controlled by Gazprom PJSC. President Aleksandar Vučić is trying to avoid nationalization, but he also needs to convince Washington that he is willing to reduce energy dependence on Russia to avoid US sanctions.

For years, politicians and analysts in Bulgaria have been warning about Russia's disproportionate role in the economy, especially in the energy sector. Lukoil has accused political pressure to force the sale of the refinery and the roughly 220 fuel stations it owns in the country, but until recently there have been no major changes.

“Russia's influence is based on energy dominance, a mechanism inherited from the Soviet era and maintained for decades. Now much of this model is disappearing. It is a transitional stage, and this is where the concern comes from,” explains Ruslan Stefanov, chief economist at the Center for the Study of Democracy in Sofia.

Historical background and changes in direction

In both Sofia and Belgrade, the authorities have concluded that maintaining a pronounced pro-Russian orientation is no longer possible after the full-scale invasion of Ukraine in 2022.

Bulgaria is a member of the European Union and is preparing to adopt the euro, while Serbia aspires to join the EU. However, historical relations — including energy dependence — have slowed down the pace of economic decoupling from Moscow.

Russia's influence increased significantly in 1999 when Lukoil bought the Neftohim refinery, now the largest company in Bulgaria. At the same time, Serbia, isolated after the NATO bombings of 1999, saw in Russia an essential ally, especially regarding the refusal to recognize the independence of Kosovo.

According to Stefanov, the accelerated changes in Bulgaria and Serbia were primarily determined by the pressure of the United States. “Without sanctions, these trials would not have taken place,” says the analyst.

Effects on energy companies

In Bulgaria, the government submitted the refinery seizure bill hours after the US Treasury Department rejected Gunvor as a potential buyer of Lukoil's international assets, calling it a “Kremlin tool”.

Rumen Spetsov, the state-appointed administrator, formally began his tenure ten days later, a move designed to assure Washington that profits from Lukoil's Bulgarian operations did not flow to Moscow.

This reorganization allowed the refinery an extension of the deadline until April. Prime Minister Rossen Zhelyazkov said that if there is no new owner by then, the government will ask for another six months. If the sale does not take place, the resulting funds would be deposited in an account inaccessible to the Russian company as long as the sanctions remain in place.

Interest in the acquisition has already been expressed by potential investors in the United States, Europe and the Gulf region. On November 19, Lukoil announced that it was taking “all necessary steps” to sell the refinery, fuel station network and other Bulgarian assets.

“The question is not whether the period of Russian ownership will end, but how this process will play out — whether it will be managed by Bulgaria or evolve outside of its control,” says Ilian Vassilev, former Bulgarian ambassador to the US.

Serbia, facing urgent elections

The situation in Serbia remains complex. NIS, a company in which Gazprom Neft holds a majority stake, was left without oil supplies after the expiration of a waiver granted by the United States. Consequently, Vučić requested that Gazprom find a buyer to avoid a nationalization. The Russian giant has asked Washington to extend the license for NIS until the process is completed.

The company has reserves for about a week, after which Belgrade will have to draw on its own stocks or buy oil at higher prices, raising the possibility of a state takeover. President Vučić announced that a decision must be made by November 23.

“If no agreement is reached on the price, we will make a better offer,” he said on November 16, adding that Serbia was prepared to cover the costs to avoid confiscation or nationalization.

Such a move would significantly reduce Russia's influence in a country where the balance between East and West has defined national politics for many years.

The long-term impact

According to Verisk Maplecroft analyst Mario Bikarski, even after the eventual end of the war in Ukraine and the lifting of sanctions, Russia's return to the Balkan energy markets will be difficult, given that the region now has a greater number of reliable suppliers and partners.

“Moscow will have to find other ways to maintain its geoeconomic influence,” says Bikarski.