Serbia and MOL sign agreement on NIS management, awaiting Washington's approval

Serbian Minister of Mining and Energy Dubravka Đedović Handanović has signed a Shareholders' Agreement with MOL Group regarding the future management of the Oil Industry of Serbia (NIS), but it will only come into force when MOL buys the Russian stake in NIS, the Ministry of Mining and Energy announced today.

The agreement, which was previously adopted by the Serbian Government, will enable, as stated, if the MOL Group "successfully" becomes the majority owner, the continuation of NIS' development, supply of the Serbian market and operation of the refinery in Pančevo.

In addition to signing the purchase agreement, additional regulatory approvals are required to complete the transaction. MOL, as stated, continues negotiations with Gazpromneft regarding the acquisition of its 56,15 percent stake in NIS.

"Today's signing of the Shareholders' Agreement defines the regulation of future relations between the state and the Hungarian MOL, if they purchase NIS from Gazpromneft. This agreement will enter into force only if MOL and Gazpromneft agree on a purchase agreement and it is approved by the US Office of Foreign Assets Control," said Đedović Handanović.

According to that agreement, as she stated, Serbia will purchase an additional five percent of shares in NIS, and the refinery will operate for at least the next ten years at the capacity it operated at for four years before the introduction of US sanctions.

She added that the agreement ensures that there will be no disruption to the operations of subsidiaries, including Petrohemija.

"Our representatives on the Board of Directors will have a greater influence on the decisions that are made. NIS is a critical energy infrastructure that affects our GDP and the state has managed to reach an agreement with the Hungarian MOL as a potential buyer of NIS, with which we will protect our market and security of supply, if they reach an agreement on the sale," said Đedović Handanović.

The agreement between the shareholders, as stated, defines the future management of NIS, the structure and decision-making processes of its management bodies, as well as its strategic goals.

The agreement, it is emphasized, enables the future majority shareholder to take responsibility for professional management, stable operations and value-creating investments in NIS. Upon successful completion of the transaction, MOL will ensure the supply of the Serbian market and the operation of the refinery in Pančevo, while further strengthening the network and logistics connections of MOL Group's energy facilities.

MOL Group President and CEO Zsolt Hernady said that as a result of constructive negotiations with the Serbian Government, an agreement on the management of NIS has been reached. "Upon the successful completion of the transaction, MOL, as the majority shareholder, will be able to manage NIS efficiently and professionally. We can start working together with clearly defined responsibilities and decision-making processes and put an end to this long period of uncertainty," said Hernady.

He added that MOL will do everything it can to make NIS stronger and more profitable, and that Serbia "sees the company as a reliable partner."

"However, it is important to emphasize that this agreement does not yet mark the end of the sales process. An agreement with the seller, as well as approval from the United States of America, is still required. I am optimistic because this would allow us to further strengthen security of supply for the entire region and achieve a higher level of cooperation among energy companies in Central and Eastern Europe," said Hernadi.

MOL, as stated in the statement, has taken the necessary steps to obtain an extension of the negotiation license from OFAC (Office of Foreign Assets Control of the United States Department of the Treasury), and the signing of the agreement represents, as it is emphasized, an important step, however, the transaction process is not yet complete.

It is added that the purchase agreement between MOL Group and Gazpromneft for the acquisition of a 56,15 percent stake in NIS is still being finalized. The key condition for concluding the transaction, among other things, is the approval of OFAC.

Commenting on today's signing of the shareholder agreement between Serbia and MOL, Serbian President Aleksandar Vučić said that he expects the operating license of NIS to be extended in 15 days, stating that these are tips he is receiving from Washington.

"Let me tell you right away, I expect that we will get another 15 days, the last 15 days of the extension from Washington. These are my contacts who tell me that it will be like that today, and it hasn't been yet," Vučić told reporters in Tbilisi.

Vučić added that this is a short period of time and that he hopes that the Russian side will accept the agreement on the sale of ownership in NIS to the Hungarian company MOL.