Russia’s Long Goodbye: What’s Behind the Delayed Sale of Serbia’s NIS?

In early July, the United States extended for another month the licence allowing Serbia’s Oil Industry, NIS, to continue operating, once again postponing the enforcement of sanctions stemming from the company’s Russian ownership. The US Treasury’s Office of Foreign Assets Control, OFAC, also extended the deadline for Hungary’s MOL to negotiate the purchase of a controlling stake in NIS from Russia’s Gazprom Neft and Intelligence, until the end of July. It marked the seventh reprieve since the start of the year, when MOL announced it had struck a framework agreement with Gazprom Neft to acquire its stake of 56.15 per cent. Six months on, the Serbian public remains none the wiser as to the fate of one of the country’s largest energy companies. The lack of transparency, the lengthy negotiations, and Moscow’s decision to negotiate the sale without first engaging Serbia, NIS’s minority shareholder, have led to speculation among some analysts that Gazprom is playing for time or simply has no intention of relinquishing its stake at all. “The Russians are not dragging this out – they simply do not want to sell,” said Vladan Pavlovic, a financial analyst at the Polish brokerage Ipopema Securities. “I see no other explanation for the prolonged negotiations. They are merely buying time.” “If they wanted to sell, they would sell to the buyer willing to pay the highest price. In this case, that would be Serbia, which has a clear interest in resolving the issue.”