Russia's Last Leverage: The Weaponization of Natural Gas and Serbia's Energy Security Dilemma

Key judgments

• Russia uses gas as political leverage over Serbia. Since May 2025 Moscow has renewed supply only three months at a time, so every renewal reopens Serbia's energy security as a political negotiation; Vučić publicly linked this format to NIS. Russian gas made up 86.6% of recorded imports in 2025. The pressure lies in the contract format itself; no supply cut tied to a specific political demand has been recorded since 2025.

• RIK results after the 1 November repeat voting give the Student List 140 of 250 seats. The 31 December renewal of Russian gas supply may overlap with the transfer of power.

• Russia still controls NIS. No final sale agreement has been publicly confirmed. On 30 October the US extended the NIS operating licence, MOL's negotiating licence and JANAF's crude transport licence to 11 December.

• Serbia can start reducing dependence before 2028 through existing routes; new interconnectors will widen its choices.

1. The Strategic Context: Russia's Changing Energy Leverage

Energy is not Moscow's only instrument in Serbia, but it is the most material. Three pillars have sustained it: majority ownership of Naftna Industrija Srbije (NIS), dominant gas supply through Gazprom and Srbijagas, and joint control of infrastructure such as the Banatski Dvor storage site.

NIS held an estimated 66% of Serbia's motor fuel market and 43% of retail in the first half of 2026, with 384 active stations, 327 of them in Serbia (company estimates). US sanctions took effect on 9 October 2025. The Pančevo refinery began suspending operations on 2 December 2025 for lack of crude and started up again on 19 January 2026.

NIS status as of 2 November 2026

These are separate steps: an operating licence, a negotiating licence, OFAC approval of a transaction and removal from the sanctions list. Forbes Srbija has reported that Gazprom may be stalling in hope of sanctions relief after the 9 October US–Russia diesel understanding; that remains a hypothesis. If Russia exits NIS, gas becomes its main material lever in Serbia. If relief lets it keep NIS, the calculation changes.

2. The Election: A New Government, an Old Dependence

After repeat voting at 53 polling stations on 1 November, RIK results from all polling stations give the Student List 53.01% and 140 seats, against 38.98% and 103 for Vučić's United Serbia; minority lists hold the other seven, according to seat calculations reported on 2 November, with formal allocation pending. Vučić conceded. The Assembly must convene within 30 days of final results, and a government must be elected within 90 days after that. These are deadlines, not waiting periods, but the gas renewal may still overlap with the handover. The incoming majority will not impose sanctions on Russia and calls gas reliance economic rather than geopolitical. Kremlin spokesman Dmitry Peskov said Moscow hopes the new force sees cooperation with Russia as in Serbia's interests. The new government will need its own channels with Moscow: Student List candidate Radomir Saičić said it would send a delegation to Moscow once formed to negotiate the gas extension and NIS sanctions. If no government is in place by 31 December, the caretaker cabinet will have to handle that renewal.

Three variables follow:

• One source of friction reduced: alignment with EU sanctions now looks unlikely.

• NIS ownership questions: a Student List candidate asked why the state never used its pre-emption right. A contractual share purchase is not nationalization, but any change to ownership plans will be read in Moscow against the gas–NIS link Vučić described.

• Scrutiny of the gas business: an anti-corruption government will likely examine opaque contracts and intermediaries.

3. The Weaponization of Energy

Energy weaponization is the use of supply, price, contract terms or infrastructure to extract political concessions a commercial partner would not demand. It often works through ambiguity: a contract expiring before winter, a discount dependent on goodwill.

Serbia has felt supply shocks before. It was hit by the January 2009 Russia–Ukraine gas crisis, and in October 2014 Russian deliveries fell 28%, from 4.5 to 3.2 million cubic metres a day, which the energy minister linked to a $224 million debt. Neither episode proves political coercion of Serbia, but both show supply can be reduced. In 2022 Russia cut deliveries to Poland, Bulgaria and Finland and throttled Nord Stream, while Serbia secured favourable three-year, oil-indexed terms for about 2.2 bcm a year.

Since that contract expired in May 2025, no new long-term contract has been concluded; supply has continued through short extensions, the latest to 31 December on unchanged terms. On 26 September Vučić said Serbia paid about €318 per 1,000 cubic metres, against a market comparison of €868. With Brent near $115 and European gas around €97/MWh in late October, Russian supply remains valuable to Serbia. Short horizons complicate long-term planning and risk management.

Is this coercion? The evidence is suggestive, not conclusive:

• For leverage: in October 2025 Vučić said the short-term offer meant Russia could stop gas if Serbia nationalized NIS. That is his interpretation, not a stated Russian condition.

• Against: Gazprom faces sanctions and payment constraints, and multi-year pricing is risky in volatile markets. The EU's import phase-out adds uncertainty, though transit to Serbia remains permitted.

• Not observed: since 2025, no cut or repricing tied to an identifiable political demand.

Our assessment is that Moscow has an incentive to renew on current terms to reassure the new government while the NIS outcome is pending. The riskier scenario links terms to NIS. Because the formula is oil-indexed, the nominal price can rise without any political motive. The real signals are changes to the formula or premium, volumes and winter flexibility, duration, payment and termination terms, and any demonstrable link to NIS. A disruption would matter: Russia supplied 86.6% of recorded imports in 2025, though the minister reported 704 million cubic metres in storage in Serbia and Hungary in late September, which would soften an initial shock.

4. Why Diversification Takes Time, but Can Start Now

Most Serbian gas arrives via TurkStream through Bulgaria and a Gazprom-majority transit company, and Banatski Dvor is also Gazprom-majority. Real diversification needs suppliers, pipeline capacity, contracts and storage at once.

The Bulgarian interconnector has 1.8 bcm a year of nominal capacity, but in 2025 it averaged 13.4% of designed capacity. The regulator cites insufficient inlet pressure from Bulgaria and bottlenecks inside Serbia, not only price and contracts. A $600 million World Bank programme approved in September, starting with a €170 million phase including the Trupale–Pojate pipeline, targets those bottlenecks. On supply, the minister said one to two million cubic metres a day had been agreed with SOCAR; talks on up to 0.9 bcm a year are unfinished. Serbia has also booked 300 million cubic metres a year at Alexandroupolis, which is terminal capacity, not gas.

Serbia can therefore reduce dependence gradually before 2028, at extra cost, through the Bulgarian route and LNG. New links will widen its choices, with the full North Macedonian route realistically available from late 2028.

5. The Paradox: Pressure Could Accelerate Russia's Decline

Moscow's strongest asset in Serbia has been reliable, affordable gas, not the threat to cut it. Every use of gas as leverage spends that credibility: Vučić's own account of the NIS warning helped legitimize diversification at home, and after 2022 pressure cost Russia most of its European market.

Pressuring a newly elected government that has just rejected sanctions would likely be politically costly for Moscow in Serbia. Predictable terms, by contrast, could keep Russia a major supplier, depending on prices, infrastructure and policy. For Serbia, diversification is not hostility: buying some Russian gas by choice, rather than all of it by necessity, allows a calmer relationship with Moscow.

6. Diversification as National Interest

Diversification is a Serbian national interest, not a foreign demand. One dominant supplier, wherever it sits, weakens a country's bargaining position. The aim is a system in which no external actor holds disproportionate leverage.

The EU funded €49.6 million of the Serbian section of the Bulgarian link, and the World Bank now funds network upgrades. The US–Serbia Strategic Dialogue, launched on 17 July, produced an energy security memorandum. It is an interstate framework launched during the outgoing government's term, so its continuity can be defended on national rather than party grounds. Realistic US openings include LNG via the Vertical Gas Corridor, DFC or EXIM co-financing alongside the World Bank, and a predictable OFAC path for NIS.

The Dialogue's flagship, Iron Gate III, is a planned pumped-storage plant. It would strengthen electricity security but would not replace gas, which Serbia uses mainly for heating and industry.

7. Policy Recommendations

1.    Agree a transition protocol: caretaker ministers and the incoming majority should adopt one position on the gas renewal and NIS.

2.    Decouple gas from NIS: seek a 12–24 month bridge contract negotiated separately from NIS, and judge it by its terms, not only its price.

3.    Resolve NIS predictably: secure a new OFAC licence and complete the sale process under way, publishing its final terms. Review the state's stake once supply is secure.

4.    Turn routes into supply: conclude the SOCAR contract, align capacity bookings along the full route, use the World Bank programme to remove bottlenecks and test LNG via Alexandroupolis.

5.    Strengthen storage: enforce the 90% fill target already binding through the Energy Community, certify the storage operator, and secure withdrawal capacity and additional options.

6.    Make transparency the signature: publish gas contract terms and keep the Strategic Dialogue's energy track.

Conclusion

Russia’s dominance of Serbia’s gas supply, reinforced by a succession of short-term contracts, gives Moscow direct and sustained leverage over Belgrade. Renewals every three months are no longer a temporary arrangement; they have become a mechanism of structural dependence, keeping Serbia in a permanent state of uncertainty and forcing it to repeatedly negotiate the security of its energy supply. Public signals linking gas negotiations to NIS further underscore how Moscow can exploit this dependence, even if the available evidence does not establish that every short-term extension constitutes explicit coercion. The 31 December renewal will be a critical test of how Moscow intends to deal with Serbia’s new government. Serbia’s priority, regardless of who governs, must be to dismantle this leverage by maximizing alternative supply routes already available and accelerating the infrastructure needed to make Russian gas a choice rather than a necessity.