Serbia-MOL deal for NIS majority stake faces political hurdles

The Serbian government and Hungarian energy company MOL have finalized a preliminary agreement concerning the acquisition of a majority stake in Naftna Industrija Srbije (NIS). However, this deal is described as merely a "facade," with the core transaction still pending between MOL and Gazprom Neft, the current majority stakeholder.

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All these previous agreements are useful for reaching that step, but they do not guarantee that the transaction itself will be realized.

"All these previous agreements are useful for reaching that step, but they do not guarantee that the transaction itself will be realized," stated Strahinja Obrenović, an assistant professor at the Faculty of Political Sciences. He added that Serbia has little say in the negotiations between the two energy giants, and market laws are not the primary drivers. Vladimir Vasić, a financial consultant and banker, noted that MOL possesses sufficient funds, with profits between 2.5 to 3 billion euros, suggesting financial capacity is not the issue. "The political moment is key here," Vasić asserted.

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MOL has enough money. The company's profit is somewhere between 2.5 to 3 billion euros. As for the money that needs to be paid, I assume it's not a problem. So, the political moment is key here.

Obrenović highlighted that the political landscape has shifted, particularly following recent elections in Hungary. While MOL should be viewed as a commercial entity, he emphasized the significant influence of political climate on the energy sector. "The statement from the Russian side in January was quite unclear, although they claimed at the time that a solution would be found that would be in the interest of the Russian Federation. After the elections in Hungary, the question definitely arises whether the Russians have retained that position, as there have already been voices from Moscow from some spokespersons stating that Hungary is a hostile country for the Russian side after the elections," Obrenović explained.

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The statement from the Russian side in January was quite unclear, although they claimed at the time that a solution would be found that would be in the interest of the Russian Federation. After the elections in Hungary, the question definitely arises whether the Russians have retained that position, as there have already been voices from Moscow from some spokespersons stating that Hungary is a hostile country for the Russian side after the elections.

The current operational license from OFAC for NIS, as well as for negotiations regarding the purchase, expires on June 16. Jelica Putniković, editor of the "Balkan Energy" portal, believes the license will likely be extended if an agreement isn't reached by then. However, she cautioned that other scenarios are possible. "If they do not extend the additional deadline for negotiations to the Hungarians, then they will probably ask Gazprom Neft to find a new buyer," Putniković noted. In the interim, NIS has already applied to OFAC for a new operational license.

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If they do not extend the additional deadline for negotiations to the Hungarians, then they will probably ask Gazprom Neft to find a new buyer.