Hungary's MOL, gov't jittery about Russian intentions

http://www.portfolio.hu/en/cikkek.td...

Wednesday, April 1, 2009 12:50:00 PM

The acquisition of a 21.2% stake in Hungarian oil and gas group MOL by Russian sector peer Surgutneftegas raises questions of energy dependence and energy supply that affect all of the countries in which MOL operates: Hungary, Slovakia and Croatia, Chairman-CEO Zsolt Hernádi told Parliament's Foreign Affairs Committee on Wednesday.

Austria's OMV announced on Monday that it sold its entire 21.2% package in MOL to Surgutneftegas for EUR 1.4 billion or HUF 19,212 per share..

2009.03.30 08:40
OMV sells total stake in Hungary´s MOL to Russia´s Surgutneftegas

Hernádi said the transaction was surprising from several aspects, for example Surgut paid twice as much for the shares than their quoted price on the Budapest Stock Exchange (BSE). He noted the Russians generally do not stop at minority shareholding, local newswire MTI reported.

Another surprise element was that Surgut had not consulted MOL about its intention to buy OMV's package and Surgut has not been active on foreign markets so far.

2009.03.30 09:11
INSTANT VIEW - OMV sells entire package in Hungary´s MOL to Surgut of Russia (4)

Hernádi also found it odd that the deal had not been preceded by political discussions, which can be considered a general practice of Russia at similar transactions. The purchase price was exactly the same as the “original cost" OMV borne when buying the papers, the Chairman-CEO added.

As MOL has no information about Surgut's intentions, it considers the company a financial investor for the time being, Hernádi said. As there had been no talks whatsoever with the company, neither the move nor the buyer can be regarded as friendly, he added. MOL learned that Surgut wants to deepen its vertical integration only from the company's website. MOL's chief noted historical evidence show that Russians generally strive to achieve more than just minority shareholding.

Finance Ministry state secretary László Keller said the government considered it important to guard the independence of companies with strategic national importance. He underlined that the cabinet had not communicated with the Austrian or the Russian sides before the deal was inked.

Keller said the government preferred if financial investors were the owners in MOL as this could be a guarantee to the company's independence. While the state cannot prevent other companies from buying into MOL via “B" ordinary shares, it will keep stepping up for MOL's independence.

Zsolt Németh, member of main centre-right opposition party Fidesz and President of the Foreign Affairs Committee, said majority Russian ownership in MOL could push Hungary's energy dependence to the extreme. This could endanger the Nabucco pipeline project and the interconnection with Croatia's LNG terminal, he added.

It is “unprecedented even in case of Russia" that a Russian company expands into a foreign strategic sector without prior diplomatic consultation with the target country.

Németh urged the cabinet to act against such aggressive foreign entry into the local economy. In his view, this is a turning point where it will need to become clear whether the government is a lame duck or an agent for Russia. He lashed the government for being unprepared and not defending the country against such action.

The Committee's Vice President Vilmos Szabó, a Socialist MP flatly rejected the opposition party's irresponsible attacks on the government.

MOL strategic director László Varró said it would be unprecedented in the whole of Europe if the Russians obtained majority in the company. He noted that the independence of strategic assets enjoys the support of every European state.

Keller said the government will gather all the necessary information but could not say what measures could be at its disposal. He stressed the cabinet would defend MOL just like it had done when OMV approached it.