Serbian crude sources..looks like supplies are very tight with no cash to pay for imports. Squeezing them on fuel is probably the best way to bring Milosevic to his knees.
Tuesday April 6, 12:18 pm Eastern Time
ANALYSIS-NATO strikes slice Serb oil supplies
By Peter Lardner
LONDON, April 6 (Reuters) - NATO air strikes have hit at the heart of Serbia's
ability to produce or import key heating and transport fuels, with both of the
country's oil refineries targeted in weekend raids, oil analysts said on Tuesday.
The destruction by NATO of three key bridges crossing the Danube may also
impede deliveries of oil products by barge from the Black Sea, they said.
NATO bombing raids on Sunday and Monday hit Serbia's only two refineries, the 107,000 barrel per day refinery in Pancevo
near Belgrade and the 60,000 bpd refinery in Novi Sad in northern Serbia, according to Serb media reports.
''Fuel is the life blood of any armed forces and depriving Serbia of its independent capacity to produce refined products
certainly puts pressure on (Yugoslav President Slobodan) Milosevic,'' said Ruslan Nickolov, London-based oil and gas analyst
with Nomura Securities.
''There are only two refineries, and if they have been destroyed, there is no real alternative for (the Serbs) but to bring in oil
products from neighbouring countries,'' said Simon Birch of oil analysts Purvin and Gertz in London.
The extent of damage to the two plants, Serbia's only refining resources, had not yet been made public although television
images showed what appeared to be severe damage at Pancevo.
NATO's targeting of bridges across the Danube, the destruction of which has blocked River traffic, may have been directed in
part by a desire to curb deliveries of oil products and other key supplies by barge, analysts said.
''When sanctions were in place before there was a substantial amount of smuggled product coming up from the Danube,
possibly from Romania and the Ukraine,'' said David Wilson of Eastern Block Energy.
''When you have eliminated barge deliveries, the amount you can move gets progressively less,'' said Birch of Purvin and
Gertz, referring to road transport of oil products.
Serbia's Pancevo and Novi Sad refineries have traditionally been supplied by crude volumes shipped along the Adria pipeline
from Croatia's Adriatic coast and along Russia's Druzhba pipeline via Hungary.
Novi Sad has also run on local crude from the northern Serbian province of Vojvodina.
Yugoslavia produces just one million tonnes of crude oil per year or 20,000 barrels per day, relying on imports for another
three million tonnes annually (60,000 bpd).
Belgrade has had long term barter deals with Chinese oil company Sinochem for crude oil and with Gazprom of Russia for gas
imports. Last year Yugoslavia announced a deal with Libya on crude oil supplies in which Libya promised to deliver 500,000
tonnes of crude by the end of 1998 and another 1.5 million tonnes in 1999.
Yugoslavia has looked for additional crude oil supplies from as far away as Mexico.
But Serbia's national state-run oil monopoly Naftna Industrija Srbije NIS has run up debts to its foreign suppliers of around
$200 million for crude and $220 million for natural gas deliveries.
The debts stem from an overall cash shortage in the sanctions-hit country and the inability of domestic industries to produce
enough quality goods to pay for energy imports.
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