Mol will obtain Gazprom’s complete 56.2% equity holding in Naftna Industrija Srbije (NIS), which was impacted by US penalties in October due to a majority Russian ownership, the Budapest-headquartered firm announced on Monday. The transaction necessitates authorization from the US Treasury Department’s Office of Foreign Assets Control (OFAC) and the Serbian administration and could be finalized by March 31, with the acquisition cost remaining undisclosed.
Additionally, Mol is in discussions with Abu Dhabi National Oil Co. (ADNOC) concerning participation in the capital of NIS as a minority stakeholder, stated Mol Chairman and CEO Zsolt Hernadi. The United Arab Emirates maintains enduring connections with Serbia, and numerous state-controlled organizations have invested in property, agriculture, and diverse sectors of the nation’s economy.
Serbia is also contemplating augmenting its share in NIS by an additional 5 percentage points from nearly 30%, Serbian Energy Minister Dubravka Džedović Handanović conveyed in Belgrade. The agreement is perceived as a political triumph for Hungarian Prime Minister Viktor Orbán preceding elections in April, wherein his party is lagging in the polls. The prime minister leveraged his affiliations with the leaders of Russia, Serbia, and the United States to facilitate the arrangement, deliberating on the potential acquisition in subsequent gatherings with the three presidents at the close of the prior year.
Hungary and Serbia now intend to request the US to revoke sanctions on NIS, which were instated as part of a wider assemblage of limitations on Russian-dominated energy resources following Moscow’s incursion into Ukraine in 2022.
Penalties against NIS — declared a year prior but becoming operative in October — have ceased petroleum deliveries via the Adriatic Pipeline from Croatia, compelling Serbia to depend on contingency provisions from Mol to avert fuel deficiencies.
Mol stocks rebounded from intraday dips on Monday and increased by 0.4%, amplifying their year-to-date gain of over 20%, as investors integrated the anticipated takeover. The entity already manages refineries in Hungary, Croatia, and Slovakia.
Orban’s associations with both the US and Russian administration, coupled with Mol’s eagerness to assist Serbia with petroleum provisions, were presumably pivotal elements in the understanding. Serbia had earlier conveyed its readiness to procure Gazprom’s holding, even proposing a surtax, but the Russian contingent declined, Serbian President Aleksandar Vucic articulated. In contrast to Bulgaria, which impounded the local Lukoil PJSC refinery to prevent a fuel crisis subsequent to US penalties, Vucic was cautious of such an action due to the prospect of exacerbating relations with Russia, Serbia’s principal vendor of natural gas.
This engendered a prospect for Orbán, who has been meticulously collaborating with Vučić and advocating for the construction of a novel pipeline from Hungary to Serbia to broaden supplies. The venture is projected to be accomplished in the coming year.
Gazprom Neft secured a governing interest in NIS in 2009, with the Serbian government preserving a share of just below 30%. Trading in NIS equities was halted early in the previous year, when the firm possessed a market capitalization of approximately $1.2 billion. Besides circumventing a potential fuel emergency, the pact will preserve in excess of 13,000 employments at NIS and establish the entity as one of the nation’s foremost taxpayers, accounting for nearly 10% of state budget earnings.
Alongside a refinery boasting a capacity of 4.8 million tons per annum in Pančevo, east of Belgrade, NIS also possesses a chain of service stations in Serbia, Romania, and Bosnia.
Source: Bloomberg