By acquiring Naftna Industrija Srbije (NIS), the MOL Group could become one of the most important energy majors in Central and Southeastern Europe. The combined lobbying power of the Hungarian and Serbian companies could also create a favourable negotiating position regarding the pricing of crude oil purchased on the international market, but currently the negotiations are clouded by questions.
The NIS Conundrum
The Russian company Gazprom and its subsidiary, Gazprom Neft, acquired a majority stake in the Serbian company NIS in 2008. Three years later, in 2011, the Russian party’s shares increased to 56.15 per cent. Due to this Russian majority ownership, NIS was placed on the US sanctions list on 10 January 2025. According to the reasoning of the Office of Foreign Assets Control (OFAC), which operates under the supervision of the US Department of the Treasury, NIS constitutes a ‘secondary threat’ because its majority owner, Gazprom, had already been sanctioned previously due to its government ties.
Thanks to the manoeuvres of Serbian diplomacy, the sanctions finally came into effect on 2 October last year, following multiple delays, and their impact was felt immediately. Since OFAC also penalizes companies that cooperate with sanctioned entities, petrol stations operated by NIS only accept payments in cash or via Serbian-owned DinaCard cards, while shortages of numerous products have emerged.
An even greater problem is that due to the sanctions, the Croatian company JANAF also refused to transport crude oil to Serbia’s only operating refinery, located in Pančevo, which is run by NIS. Crude oil purchased on international markets can only be imported into Serbia via the Adria pipeline operated by JANAF.
Two options appeared acceptable as potential solutions: the nationalization of NIS, or the sale of the Russian majority stake. The Serbian leadership condemned the former option in numerous press statements; therefore, the sale of the Russian shares seemed to be the only viable alternative.
The Importance of NIS
NIS holds a monopoly position in Serbian domestic oil extraction and refining. According to the latest information, this accounts for approximately 20 per cent of the country’s crude oil demand. On a daily basis, this means the extraction of around 17,000 to 18,000 barrels of crude oil, primarily in the northern parts of the country, in the Vojvodina region. Furthermore, the company operates the refinery in Pančevo, which is the only facility capable of processing the 70,000 to 73,000 barrels of crude oil purchased daily on the international market.
However, one of the most marketable aspects of NIS is its role in the retail sector. NIS is the sole producer of oil derivatives, giving it an 83 per cent market share in this segment according to the latest data. Similarly, it holds a prominent share in the fuel market. On a nationwide scale, NIS possesses the most extensive retail network, owning 22 per cent of the petrol stations in the country. This represents a total of 322 stations, including NIS Petrol as well as the premium brand operated under the Gazprom name.
Lukoil, which is also Russian-owned, is the second-largest market player, owning 7.5 per cent of the stations. The global or regional chains with networks in Serbia (OMV, EKO, AVIA, and Petrol), including MOL, control 14 per cent of the sector. However, it is important to highlight that NIS stations can be found almost without exception along the busiest routes, and numerous smaller, Serbian-owned petrol station networks purchase their fuel from NIS.
‘MOL Group could become one of the most significant retail players in the Central and Southeastern European region’
Based on the latest data, MOL currently has 72 petrol stations in Serbia, meaning that by taking over the NIS network, it would become the dominant market leader by a wide margin. In addition, the Serbian company owns 42 filling stations in Bosnia and Herzegovina, 19 in Romania, and another 23 in Bulgaria. According to current reports, the Bulgarian and Romanian stations will not be acquired by MOL. Nevertheless, following the acquisition, the MOL Group could become one of the most significant retail players in the Central and Southeastern European region.
Unfavourable Environment
Although the consortium led by MOL tries to push the deal through, the current political and geopolitical environment is not favourable. Serbia will hold general elections on 25 October, and the Students List, which is linked to the ongoing protests in the country, has a real chance of winning the election. In this political context, the current Serbian leadership tries to leverage its influence as the main protector of the country’s interests.
Aleksandar Vulin, leader of the Socialist Movement, which is part of the governing coalition, said that the Serbian state can buy out Gazprom if necessary, because, from a Serbian perspective, if it has to be sold, it’s better if it’s sold to Serbia. Vulin previously was one of the deputy prime ministers and was known for his good Russian connections. It’s also important to point out that Serbia imports 75 per cent of its natural gas needs through Gazprom at a reduced price. The two parties signed an agreement on the first of October, which ensures that Serbia continues to receive Russian gas at a reduced price around 318 euros per 1,000 cubic metres, while the current market price is 868 euros. This agreement, however, only runs until the end of this year, while the previous ones had a two-year runtime. This short-term deal ensures close cooperation between the Serbian state and Gazprom at a crucial time and also allows the Russian company to stall in the NIS negotiations.
The geopolitical environment also hinders the sale. The United States paused the implementation of the Graham Act, which would heavily tax the purchase of Russian fossil fuels. The Trump Administration also temporarily lifted its sanctions regarding Russian crude oil, and the US also allowed Russia to export 2.25 million barrels of its diesel fuel to the US and world market. These measures were aimed at helping reduce US and global fuel prices. Given these circumstances, Gazprom is in no rush to sell its share in NIS and can potentially look for other buyers as well. Aleksandar Vučić suggested, in one of his television appearances, that if the energy negotiations between the United States and Russia go well, the Russian side would be willing to sell its share in NIS to American companies instead of MOL.
Currently, we have more questions than answers regarding the negotiations between the consortium led by MOL and Gazprom, and it’s also important that the final deal will require an agreement with OFAC and the Competition Council of Bosnia and Herzegovina as well. But nonetheless, if MOL manages to acquire the company, it will be a prized asset in its regional network. At the time its trading was suspended last January, the market value (market capitalization) of NIS stood at around 1.2 billion dollars. However, according to figures from the end of last year, the company’s book value amounts to 3.5 billion dollars, and market rumours suggest that MOL could acquire a 56 per cent stake in the company for 1.4 billion dollars, of which it will pass on 5 per cent to the Serbian state at a certain exchange rate. Ultimately, the fate of the NIS acquisition currently depends on Serbian political and geopolitical factors, rather than the competitiveness of MOL’s financial offer.
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