Surgut seen caught in red tape, voting in Hungarian MOL's AGM unlikely

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Red tape will not allow Russia’s Surgutneftegaz to vote at Hungarian fuels group MOL’s annual general meeting for the second year in a row, because it has not been registered as a stakeholder. Surgut is unlikely to attend even as an observer, local newswire MTI reported. Russian authorities keep supporting Surgut in the MOL case, the country’s Energy Minister Sergei Smatko told reporters.

Even Russian papers wrote in early April that Surgut was unable to register itself as a shareholder in MOL more than one year after it had purchased a 21.2% stake in the Hungarian oil and gas group from Austria’s OMV.

Surgut will not be allowed to attend MOL’s AGM until financial markets regulator PSZÁF completes a probe into Surgut’s acquisition that it had started last April. The watchdog’s inquiry is to determine whether the Russian company’s ownership infringes capital market regulations (i.e. the ban of insider dealing or market manipulation) or not.

The PSZÁF has yet to announce the findings of its investigation.

Russia’s Energy Minister Sergei Smatko said on Tuesday that local authorities continue to back Surgutneftegaz in the MOL case and just like in the past they would consult with Hungarian and European Union officials in the matter.

He said the transaction by which Surgut acquired its MOL stake was transparent and was in conformity with European regulations. Smatko underlined that Hungarian authorities have not shown Russia any kind of document that would have proven the unlawfulness of Surgut’s purchase.

Spokesman for the Hungarian cabinet told MTI on Wednesday that the government had repeatedly reminded its Russian counterpart that it is supporting MOL’s strategy, one of the cornerstones of which is retaining the company’s independence.

MOL had made it clear earlier that it considers Surgut acquiring a 21% MOL stake for EUR 1.4 bn a hostile move. The government kept stressing that MOL’s independence was not for sale.

Surgut’s acquisition requires approval by the Hungarian Energy Office, but due to the size of the package in question, the authority put questions to the Russian company which it reportedly did not receive responses to.

Surgut was banned from participating in MOL’s AGM in 2009 as it was not acknowledged as a shareholder in MOL’s register, because it failed to disclose its own shareholder structure and ultimate beneficiaries. The regulator was also keen to know why Surgut paid double the market price for the MOL package.

While local press recently reported that Surgut later satisfied the HEO’s inquiry, but the energy authority could not confirm the report, saying the relevant procedure had been suspended. The reason for that is that there is another probe in progress at the financial markets supervisor (PSZÁF) and until that is over, the HEO’s hands remain tied.

Surgut CEO Vladimir Bogdanov said in mid-March that his company had no intention to sell its 21% stake in MOL.

"We are content with the deal. The share price is rising, why would we want to sell?," said Bogdanov, head of Russia’s fourth-largest oil company.

He reminded that Surgut made no money on being a shareholder in MOL. Not so long after the state-owned Russian company bought the MOL package last year, the Hungarian company decided not to pay dividend on 2008 results, although it had distributed 40% of its much smaller profit a year earlier.

In February, Russian media reported that MOL was to buy back its own package from Surugut.

A research analyst of a Russian investment company told daily Kommersant recently that Surgut might in the end consider starting talks about selling its MOL stake if it becomes evident that its attendance and voting in MOL’s AGM this year is out of the question.

The analyst noted, though that even if Surgut was allowed to vote, it would not be able to have a controlling say, given the 10% voting cap set in MOL’s Articles.