The management at Mol and experts of the whole industry were shocked by the news that last Monday, the Western-Siberian Surgutneftegas (Surgut) bought OMV's 21.1 percent stake in Mol for almost twice the current rate. Of course it was only to be expected that the Austrians, who had ended up losing the war between Mol and OMV, would do something with their share packet. The privatisation of Mol ended in 2006, as a consequence of which its shares could be bought and sold. Preparing to defend itself against the hostile buying up, Mol drafted several scenarios, and in these they calculated in the Russian "rapprochement", for Moscow has not been trying to hide the fact that it has been expanding by buying up Central European companies or acquiring shares in firms. However, this step seems to have no precursor: just a week before the transaction, the CEO of OMV, Wolfgang Ruttenstorfer said they would not sell the Mol-packet this year. And yet, only a few days later, with the American finance company J. P. Morgan acting as mediator, they concluded the 1.4 billion-Euro deal.

What a circus!

There are several strange things about this deal, for example, the extremely high purchase price, most advantageous for OMV. The Austrians received 19 212 Forints for each share, instead of the market price of 9940 Forints. If we make a quick calculation, this sum is exactly equal to what OMV had to pay for the bonds along the years. Another interesting thing is that this is the first foreign transaction of the buyer. What's more, Surgutneftegas bought the Mol shares without first consulting with the Hungarian company, it didn't even examine the figures or performance of Mol. No political consultation took place either, although the Russians usually do consult in similar cases, at least that is what the official statement of the Hungarian government's spokesman said. And yet the exchange of information could have taken place on two different occasions: the Austrian Chancellor had talks in Budapest in early March, then a few days later Russian-Hungarian intergovernmental consultations were held in Moscow.

Finally, the timing itself is interesting, perhaps it is not by chance that all this happened in the middle of the government crisis in Hungary. Moscow may have been afraid of early elections being held, which would have resulted in Fidesz gaining power, and as we know, Fidesz views Russian expansion with alarm. Thus, just a few hours after Ferenc Gyurcsány resigned from his post as leader of the Socialist Party, OMV sold all its shares in Mol to Surgutneftegas.

Last Wednesday, Fidesz member Zsolt Németh, chairman of the Parliament's Committee on Foreign Affairs, convened the committee and asked "How it was possible that the government knew nothing about the intentions of the Russians?" Never before has it happened that a foreign company bought such a large share of a strategically important company against the wishes of the government. "These relations can never become amicable," Zsolt Hernádi, Chairman and CEO of Mol added. He also said that for the time being they consider the Russian company a financial investor that does not wish to influence company politics. Whether they shall consider Surgut as a hostile purchaser - one that attacks the company from inside in order to take over management - depends on the future steps taken by the Russian company.

Should we start learning Russian?

Some sources say the Austrian OMV has from the start been buying up Mol-shares for the Russians (for Gazprom, the greatest state-owned company). It was quite evident that it wasn't really worth it for OMV to acquire this Hungarian company, striving for the role of Central European regional multinational. Since Hungary is in a strategic position regarding the route of Russian gas to Europe, it was to be expected that if the Austrian line failed, Moscow would try in a more direct way to acquire the gas pipelines and oil refineries of Mol. It is true that of all the major Russian oil companies, Surgut is the one we know the least about, so it's not even clear whether or not they bought shares for their own use. Is Gazprom behind it? Or does it have ties with the other Russian state-owned giant, Rosneft? "My knowledge of Russian economic logic tells me they won't stop at 21 percent; they usually strive to acquire majority ownership," says Zsolt Németh. According to the leading analyst of Cashline, Kornél Sarkadi Szabó, Russian companies do not ususally buy twenty percent packets in energy companies.

The next annual meeting of Mol will be held on 23rd April, where the representatives of the mysterious Surgut company will presumably introduce themselves. What's more, they may even announce their claim to a seat on the board of directors, which will require a majority vote at the general assembly. If they were to get a seat - OMV did not demand one - they would be able to get an inside view of the oil company's affairs. As a result of the "war" with the Austrians earlier on, there is now a strict statute protecting Mol. Irrespective of their share of property, no shareholder may have more than ten percent of the votes, and several brakes have been built in through the regulations regarding strategic companies, to prevent a hostile takeover or secret buying-in. What's more, approximately half of the shares are in the hands of investors who have close ties with the management. Following a complaint from Mol, the Hungarian Financial Supervisory Authority has started to examine this transaction in the hope of finding some kind of contradiction which offends the laws of capital market, for example by giving public information that may mislead investors.

The consequences of winning ground

Earlier on, Mol and the political elite of Hungary cooperated in thwarting the Austrian takeover. We have yet to see what the future Bajnai government will do once its predecessor has sold the last national share of the strategically important company, in order to reduce the deficit of a wasteful state budget. The behaviour of the cabinet led by Gyurcsány gives rise to doubt that the outgoing prime minister was - and still is - considered by many to serve Russian interests, even though Moscow's gaining ground raises issues of energy dependency and supply, for 80 percent of our heating needs are met by Russian natural gas. "If the gas pipeline network goes into Russian hands through Mol, how could the aims of getting gas from several sources ever be realized?", asks energy expert Péter Kaderják. It is Mol that is the driving force behind diversified acquisitions: the company is a participant of the European Union's Nabucco project, it is involved in the connection of Hungarian-Slovak and Hungarian-Romanian networks and in creating the connection with the Croatian condensed natural gas terminal. If these plans fall through because of pressure from the Russian owner, the one-sided dependency will result in Hungary's defencelessness and gas becoming more expensive.         

Could Gyurcsány possibly decamp?

The greater part of Europe is trying to escape from the strong embrace of the Russian bear: Russia is openly using energy sources as political capital, and is even capable of influencing EU decision making. Beside oil, gas has also become a geopolitical commodity, but while it is easy to transport oil, the storage and transportation of gas is more complicated, that is why the pipelines are of primary importance. According to Moscow, it is not enough to sell gas, taking part in its transportation and distribution is also necessary. In comformity with this, Gazprom is persistently pressing forward in the European energy sector: it owns half of the Moldavian Moldovagaz, one third of the Lithuanian Lietuvos Duvos, 34 percent of the Latvian pipeline, 48 percent of the Polish STG Europol, 35 percent of the German Wingas, the greater part of the Serbian network, but it has also acquired the Belarussian Beltransgaz. There is not much that the European Union can do: if the market is free, the Russian Gazprom can do - even through companies that serve as a front - whatever it likes. However, in Spain and Great Britain, the governments have managed to repel Gazprom with political means.

The state-owned giant enterprise is also promoting the construction of new pipelines, by avoiding countries that have tense relations with Moscow, such as Ukraine, Poland or the Czech Republic. The Russians and the Germans concluded an agreement in 2006, according to which they shall build the Northern Stream, under the Baltic Sea, by avoiding Poland. Moscow also supports the plan of the Southern Stream, which is the rival of the Nabucco pipeline, which in turn is favoured by the European Union and excludes Russian gas. The Southern Stream would not go through Ukraine and would transport Russian gas to Italy, under the Black Sea, and to Austria through Hungary.

It caused quite a stir both here at home and in the European Union that Ferenc Gyurcsány voted for building the Southern Stream. Since then, all kinds of conspiracy theories have come to light concerning why he visited Putin so often and what he may have received in return. Just a few weeks before stepping down, Gyurcsány signed a contract that obliges the government and the Hungarian Development Bank Private Limited Company (MFB) to finance the construction of the Southern Stream pipeline within Hungarian territory. The Russian paper, Kommersant, reflected on the possibility that the Hungarian politician might follow in the footsteps of the German Chancellor, Gerhard Schröder, who - as a supporter of the Northern Stream - following his resignation, became the chairman of the supervisory committee of the company responsible for the implementation of the project. Gazprom and the Italian ENI have already admitted the Southern Stream joint stock company to the stock exchange in Switzerland, but the managerial seat is still empty: the former prime minister of Italy, Romano Prodi, refused the offer recently.

Moscow is strengthening its position in Hungary in other areas, too. Two years ago, Malév, the Hungarian airlines, went into Russian ownership, and the Russian oil company, Lukoil, bought Jet-chain, which operates 32 service stations in Hungary. Putin and company have their eyes on MÁV Cargo, acquired by the Austrians, but they might also have got their eyes on OTP as well. Gazprom had almost succeeded in acquiring the property rights of Hungarian gas storage companies from the German energy company E.ON in exchange for gasfields, but the deal fell through in the end. Around the year 2000, the Russians tried - through the Austrians - to acquire the Hungarian chemical industry. Vienna Capital Partners (VCP), considered to be the Viennese concern of Gazprom, was behind CE Oil & Gas Beteiligung, which had shown an interest in TVK and BorsodChem.
VCP had played an important role as mediator when, in 2007, the Russian businessman, Megdet Rahimkulov, who had formerly been the Hungarian representative of Gazprom, bought Mol-shares and subsequently sold them to the Austrian OMV company.

Surgut in the pantry

Ágnes Gereben
uzlet@hetivalasz.hu

The main problem of Surgutneftegas, the greatest crude oil supplier of the Russian army, is its frightening lack of transparency. Although it is listed on the stock exchange, the last time it published information regarding its ownership structure was at the beginning of 2003. (All that can be found out from the homepage of  Surgut is that the company has 38 120 shareholders.) From this it can be seen that the company figuring as the main shareholder in the annual report of 2002 has disappeared without a trace, 36.7 percent of its shares went into the hands of four unnamed individuals, then ended up in two dozen phantom firms owned by the management.

According to data from April 2006, Vladimir Bogdanov, the 58-year-old CEO is the owner of twelve such firms. All of them were founded in July 2002, with a minimum amount of capital (between one thousand and ten thousand Rubels). The business daily Vedomosti revealed that for nine of these money-laundering firms, the annual reports of 2002 indicated no profit whatsoever, while in 2003, the profits reportedly amounted to 263 billion Rubels. Their long-term placings (securities, shares, granting of credit) amount to an even higher sum of 271 billion Rubels. In 2004, this figure increased by 18.9 percent, while in 2005, it increased by 52 percent.

From their tax returns for the years 2004-2005, it is evident that their revenues originating "from participation in other organisations" correspond precisely to the dividends from Surgutneftegas. In other words, the nine firms had a 36.73 percent portion of shares - which they supposedly got without any compensation. Apart from these companies, the insurance company named Social Protection, which is the property of Bogdanov, also owns Surgutneftegas shares, it has 4.12 percent ownership.

In Russia, it is believed that the smaller proportion of the giant company belongs to the sphere of interest of Vladimir Putin. It is a fact that since 2002, the exports of Surgutneftegas have been managed by Gennadij Timchenko, the billionaire oil exporter living in Switzerland, who has had close business ties with the Russian prime minister for the past twenty years.