Photo: Ministry of Mining and Energy
Within the negotiations about its proposed takeover of Serbian oil refiner NIS, Hungarian MOL Group drew up a term sheet with Gazprom Neft, Minister of Mining and Energy Dubravka Đedović Handanović said. The Russian state-owned company holds 44.9%, while another subsidiary of Gazprom, Intelligence, owns 11.3%. MOL Group said the deal, with Gazprom Neft, is for the Russian owner’s 56.2% stake.
In addition, Serbia secured an increase of its 29.9% share by five percentage points, and partners from the United Arab Emirates are expected to participate in the contract, according to Đedović Handanović.
The talks about MOL Group’s potential acquisition of a majority share in NIS, which operates the only refinery and largest fuel station chain in Serbia, have resulted in a term sheet for a future purchase contract, Minister of Mining and Energy Dubravka Đedović Handanović revealed today. She said the document that the Hungarian company agreed with Gazprom Neft would be sent to the United States for approval.
In addition, Serbia secured an increase of its 29.9% share by five percentage points, and “partners from the United Arab Emirates” are expected to participate in the contract, according to the minister, who didn’t identify them.
MOL vows to keep refinery in Pančevo in operation
Negotiations about the details are continuing, Đedović Handanović added. Importantly, MOL has committed to maintaining the earlier level of production in the refinery, and increasing it in case the market share needs to be preserved, the minister stressed.
MOL Group announced a few hours later that it signed a deal, a heads of agreement (HOA), with Gazprom Neft. The transaction can ensure a long-term, stable operation of the Pančevo refinery and the related business units, as well as the uninterrupted supply of the region’s energy markets, the Hungarian company claimed.
NIS operates 327 service stations in Serbia and several dozen more in Romania and Bosnia and Herzegovina.
“The energy sovereignty of landlocked countries requires the cooperation of strong local refineries that operate predictably and successfully and the involvement of strong partners. Therefore, the MOL Group is in negotiations with ADNOC, the national oil company of the United Arab Emirates, to join the owners of NIS as a minority shareholder, while retaining MOL’s majority ownership and control. We are ready for the task and will continue discussions with our partners,” said Chairman and CEO of MOL Group Zsolt Hernádi.
Gazprom Neft said they signed a letter of intent, TASS reported.
US deadline for acquisition deal is March 24
NIS, also known as Naftna industrija Srbije, is under US sanctions because of Russian ownership. The company requires a green light from the Office of Foreign Assets Control (OFAC) of the Department of the Treasury to be able to operate regularly.
Amid the takeover talks, the administration of President Donald Trump issued a waiver three weeks ago, valid through January 23. Separately, the US has allowed NIS to find a buyer by March 24 at the latest.
The parties aim to sign the sales and purchase agreement by March 31, MOL Group said.
Gazprom Neft holds 44.9%, while Intelligence, another subsidiary of Russian state-owned Gazprom, owns 11.3% of NIS. The said increase in the stake that Serbia holds would enable the government to participate in certain decisions, the ones requiring a two-third majority.
The deal is for Gazprom Neft’s 56.2% stake, MOL Group underscored.
Unclear role of Abu Dhabi’s ADNOC, unknown fund from UAE
Serbian officials earlier mentioned Abu Dhabi National Oil Co. (ADNOC) as a potential buyer. There has also been speculation about a fund of an unspecified type from the United Arab Emirates that was interested in the investment. ADNOC, fully owned by the Emirate of Abu Dhabi, has a 24.9% stake in Austria-based OMV.
Hungary indirectly holds a majority stake in MOL. Of note, OTP banka Srbija, the subsidiary of Hungarian OTP Bank in Serbia, has 1.7% of NIS. The government in Budapest controls just a marginal stake in the lender.
NIS has 173 million barrels of oil equivalent 2P (proved and probable) reserves, with daily crude and gas production in Serbia exceeding 20 thousand barrels of oil equivalent, according to MOL Group. The Serbian company also holds exploration licences in Romania and Bosnia and Herzegovina.
Over the past decade and a half, the Pančevo refinery has undergone comprehensive modernization, the potential buyer underscored. The refining capacity is nearly 4.8 million tons per year, MOL Group added.
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