Agreement on future management of NIS signed – To come into force when MOL buys Russian stake

Serbian Minister of Mining and Energy Dubravka Djedovic Handanovic has signed a Shareholders’ Agreement with MOL Group regarding the future management of Naftna industrija Srbije (NIS), but it will come into force only when MOL buys the Russian stake in NIS, the Ministry of Mining and Energy announced today.

The agreement, which was previously approved by the Serbian Government, will enable, as stated, if MOL Group “successfully” becomes the majority owner, a continued development of NIS, the supply of the Serbian market and the operations of the Refinery in Pancevo.

Additional regulatory approvals required

In addition to signing the purchase agreement, additional regulatory approvals are also required to complete the transaction. MOL, as stated, is continuing negotiations with Gazpromneft regarding the acquisition of its 56.15% 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 buy 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 Djedovic Handanovic.

According to this agreement, as she stated, Serbia will buy an additional 5% of shares in NIS, the refinery will operate for at least the next ten years at the capacity in which it operated for four years before the introduction of US sanctions. She added that the agreement ensured that there would be no disruption in 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 Djedovic Handanovic.

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.

Reliable partners

Upon successful completion of the transaction, MOL will ensure the supply of the Serbian market and the operation of the refinery in Pancevo, while further strengthening the network and logistics connections of the MOL Group’s energy facilities.

MOL Group President and CEO Zsolt Hernadi said that as a result of constructive negotiations with the Government of Serbia, an agreement on the management of NIS had been reached.

– Upon successful completion of the transaction, MOL, as the majority shareholder, will be able to manage NIS efficiently and on a professional basis. We can start working together with clearly defined responsibilities and decision-making processes and put an end to this long period of uncertainty – said Hernadi. He added that MOL would 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 sale process. An agreement with the seller is still needed, as well as approval from the United States. I am optimistic because this would allow us to further strengthen the 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 said 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 is, 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% stake in NIS is still being finalized.

A key condition for the conclusion of the transaction, among other things, is the approval of OFAC.

Ministarstvo rudarstva i energetike Republike Srbije

NIS a.d. Novi Sad

NIS a.d. Petrol Rafinerija nafte Pančevo

MOL Serbia d.o.o. Beograd

MOL Hungarian Oil and Gas Budapest

Ministry of Mining and Energy of Serbia

Naftna industrija Srbije

NIS

Pančevo Oil Refinery

MOL

Gazpromneft

OFAC

Dubravka Đedović Handanović

Zsolt Hernadi

agreement

shareholders