Both Hungary and the UAE may end up buying Russia’s stake in Serbian oil company NIS, which operates Serbia’s only refinery, Pancevo.
Hungarian Foreign Minister Péter Szijjárto announced last Thursday that Hungary’s MOL Group has the support of the Hungarian government to buy the Russian stake in NIS. The foreign minister also indicated that the first agreement to do so has already been signed. However, other players are now also interested, with no final buyer decided upon.
According to the Serbian newspaper Direktno, the United Arab Emirates’ state oil company, ADNOC, also wants to acquire the Russian stake in NIS, and the UAE and Hungary are now in negotiations.
Direktno reports that the Pancevo Refinery is planned to resume work at the end of the week, after being shut down for nearly two months. However, at stake is the refinery’s U.S. OFAC license, which allowed the refinery to import crude through Croatia’s JANAF and expires on Jan. 23.
Last October, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) had imposed sanctions on NIS due to its being majority owned by Russian companies, giving it until late March to sell these shares.
“If OFAC extends the operating license, it will be a signal that the negotiations are moving in the right direction, and if that does not happen, then I am afraid that we will have a situation like with Lukoil, when America did not agree to the sale,” Pavlović points out.
Szijjártó called the potential deal “a huge step forward in terms of security of supply to Central Europe,” adding that there is a real chance that MOL will reach a key agreement with Russia’s Gazprom and Gazprom Neft on the purchase of their majority stake in NIS within one to three days.
According to Reuters, “Gazprom and Gazprom Neft own 11.3 percent and 44.9 percent of NIS, respectively. The Serbian government has a 29.9 percent stake.”
“The critical point is that we do not know what is being negotiated between MOL and Gazpromneft, that is, whether the Russian side is trying to find a way to keep its share in ownership,” said Vladan Pavlović, an analyst at Ipopema Securities.
As to the interest by ADNOC, the analyst says, “If both companies are really interested, maybe the idea is for MOL Group to run the retail network, and for ADNOC to own the Pančevo Refinery.”
President of Serbia Aleksandar Vučić visited the UAE recently, where he discussed with President Mohammed bin Zayed Al Nahyan, among other things, the purchase and sale of NIS.
Currently, the EU has directed all member states to stop all imports of Russian oil by 2027, a plan opposed by Hungary and Slovakia. At the end of last year, Belgrade and Budapest announced the construction of an oil pipeline, at a cost of around €500 million, which should be completed by 2027. The pipeline would pass through Serbia for 113 kilometers and through Hungary for 190 kilometers, and then connect with the Russian “Friendship” oil pipeline on the border of Hungary and Ukraine.
“If Hungary will not be able to buy Russian oil, then the construction of an oil pipeline makes no sense, and not for NIS, either,” says Pavlović. As he adds, there is a risk that the investment will be “in vain” if Hungary fails to fight for a position where it can continue buying Russian oil.
