Hungary is taking no chances with control of Mol (MOL:BUD), the national oil company. After announcing a €2.88bn deal to buy back a controversial 21.2 per cent stake from Surgutneftgaz, the secretive Russian energy group, Budapest is proposing to up its stake further, to up to 24 per cent.
The fact that the cash-strapped government, which emerged from an IMF rescue only last year, is spending big money on increasing national control over Mol highlights how sensitive Hungary is over Russian influence in the energy sector. Most other central European states are no different. Oil sector investors in the region ignore politics at their peril.
The additional shares are coming from the semi- private pension funds that the government is nationalising, taking control of their €10bn portfolios, including a 2-2.4 per cent stake in Mol. Peter Szijjarto, the government spokesman, said on television late on Tuesday that the state would also retain these shares taking its stake to up to 24 per cent.
The centre-right Fidesz government, which has been in talks with Russia about reacquiring Surgut’s Mol stake since last year, will hope that these deals ensure Budapest never again runs the risks of Mol falling into foreign hands.
The government sold its last 1.7 per cent chunk in the former national oil and gas monopoly in 2006 but quietly made sure that a big stake – around 40 per cent – was held by Hungarian investment. But that did not stop Austria’s OMV from buying a 21.2 per cent stake and mounting an unsuccessful takeover bid. Hungary fought off the Austrian assault, but only at the price of annoying European Union partners concerned about keeping capital markets open. OMV took its revenge by selling the stake to the highest bidder – Surgutneftgaz.
With Budapest fearing that its worse nightmare – a Russian takeover of Mol – was no longer unimagineable, Mol stonewalled Surgut (SNGS:MCX), rejecting the Russians’ offers of cooperation talks. It seems that Surgut eventually got fed up and agreed to sell at a price which leaves it with a decent profit on its €1.4bn purchase.
In an ironic twist, the Fidesz-led government is financing the Surgut deal with unused IMF funds left over from its 2008-10 rescue programme. The IMF representative in Budapest told Reuters on Wednesday that Hungary was free to use its foreign currency deposits for this purpose.
Mol is a unique company with a unique role in the Hungarian economy. So don’t expect Budapest to start buying back stakes in other former state-owned groups such as OTP, the bank, or drug maker Gedeon Richter. But do expect other central and eastern European governments to be equally careful about Russian investments in the energy sector. Poland is a case in point with the government planning to sell a big stake in Lotos, the second larget refining group after PKN Orlen.
Stefan Wagstyl
Josh Noble
Rob Minto
Pan Kwan Yuk
Jonathan Wheatley
Heba Saleh