Hungary's MOL secures OFAC approval for preparatory steps in planned NIS acquisition

MOL (BSE: MOL) and its subsidiary MOL Serbia Investment Ltd. have received approval from the US Treasury Department’s Office of Foreign Assets Control (OFAC) to proceed with preparatory transactions linked to the planned acquisition of Serbia’s oil company Naftna Industrija Srbije (NIS), the company announced on the website of the Budapest bourse (BSE) on November 5.

The licence covers the transfer of Russian-issued securities to MOL Serbia Investment Ltd., as well as related activities, including obtaining certain Russian government approvals. It is valid until February 28, 2027.

The approval does not, however, cover the actual transfer of Russian ownership and control in NIS. A separate OFAC licence will be needed to complete that part of the deal, as the United States imposed sanctions on NIS a year ago because of its Russian majority ownership. As a result, transactions involving the Russian-held stake or Russian-issued securities can require specific authorisation from OFAC.

This licence effectively allows MOL to continue preparing the transaction without breaching U.S. sanctions. However, the decisive step, a transaction that would end Russian ownership and control in NIS, still requires a separate OFAC authorisation.

MOL said in January that it had reached agreement with Gazprom Neft on the main terms of a binding framework deal to acquire its 56.15% stake in NIS. Talks on the transaction are still ongoing. MOL is also in discussions with Abu Dhabi National Oil Company (ADNOC) about bringing it in as a minority shareholder.

In June, MOL signed a shareholders' agreement with the Serbian government setting out the framework for NIS's future governance. If the acquisition goes through, the agreement is intended to support the company's development, ensure security of supply to the Serbian market and maintain operations at the Pancevo refinery.

Gazprom currently owns 11.3% of NIS, while its subsidiary Gazprom Neft holds a further 44.9%. The Serbian government has a 29.87% stake, with the remaining shares held by minority investors

If completed, the takeover of NIS would significantly expand MOL’s Central and Southeast European footprint. The shareholders’ agreement with Serbia provides for the Pancevo refinery, which has a capacity of about 4.8mn tonnes per year, to operate for at least ten years at a capacity comparable to the four years before US sanctions.

An earlier analysis by MBH estimated the NIS purchase price at roughly €0.9-1.1bn and expected the acquisition to lift MOL’s upstream, downstream and consumer-services volumes by around 15%. MOL’s net debt/EBITDA ratio could rise from about 0.5x to around 1x, higher leverage, but still broadly manageable given MOL’s balance sheet.