BELGRADE – In a significant move within the energy sector, Hungary’s MOL Group has announced a preliminary agreement to acquire a majority stake in Naftna Industrija Srbije (NIS), Serbia’s leading oil supplier, which is currently under U.S. sanctions due to its Russian ownership.

MOL Group revealed in a statement on Monday that they have reached a “binding Heads of Agreement with Gazprom Neft.” However, this deal is contingent upon approval from the U.S. Office of Foreign Assets Control, which must be secured before the transaction can be finalized. The parties involved have set a target of March 31 to complete the sales and purchase agreement.

Controlling almost the entire Serbian oil market, NIS also operates the country’s sole oil refinery, making this acquisition a strategic expansion for MOL Group. The Hungarian energy company aims to bolster its influence in the regional market through this acquisition.

“As a reliable regional energy provider, we are eager to contribute to the development of Central and Southeastern Europe,” remarked Zsolt Hernadi, Chairman and CEO of MOL Group, underscoring the company’s commitment to enhancing energy infrastructure in the area.

In addition to this development, Hernadi mentioned ongoing discussions with the Abu Dhabi National Oil Company (ADNOC), as they consider becoming a minority shareholder in the deal, potentially adding another layer of international collaboration.

Serbia’s Energy Minister, Dubravka Djedovic Handanovic, commented on the potential benefits for Serbia, noting that this agreement would increase the nation’s stake in NIS by 5%, raising it from the current 29.87%. This boost in ownership is anticipated to strengthen Serbia’s position in its energy sector.

Washington imposed sanctions on NIS as part of a crackdown on Russia’s energy sector last year and the sanctions went into effect in October. NIS has a license from OFAC to negotiate the sale by March 24.

Serbia is formally seeking European Union membership but the country has maintained strong ties with Moscow and refused to join Western sanctions imposed on Russia because of the invasion on Ukraine.

Serbia sold the majority stake in NIS to Russia in 2008.