US said pressing Hungary to prevent INA sale to Russia

By bne IntelliNews November 3, 2014


US officials are reportedly pressing Hungary over worries the country's energy giant MOL is set to revive plans to sell its stake in Croatian oil and gas company INA to a Russian bidder. The issue cuts to the core of the recent standoff between Budapest and Washington.

US concern over where Hungary's loyalties lie has been mounting for some time, but accelerated in September when Budapest cut gas supplies to Ukraine in return for increased deliveries from Russian gas giant Gazprom. Since then, Prime Minister Viktor Orban's government has been openly criticized by US President Barack Obama and various officials. Six Hungarian officials were banned from traveling to the US in October, and the US is now mulling "Budapest's dangerous drift into Moscow's orbit."

Reuters reports that Washington is now mounting a diplomatic offensive to prevent Hungary selling its 49% stake in Croatian energy firm INA to a Russian company. Previously, MOL has suggested it could divest its stake to get itself out of a long-running spat over control of INA, in which the Croatian state holds 44%. 

The Croatian state has also said it could sell its stake. However, it's thought there are few likely suitors outside of Gazprom and Rosneft. Yet allowing either Russian state giant to control such a strategic EU asset would not be welcomed by Brussels or Washington.

US officials are now warning their Hungarian counterparts that MOL - in which the Hungarian state controls via a 24% shareholding - should avoid such a sale, according to Reuters. Zagreb is also being asked to hold off on any deal. Given the recent troubles at INA, which have hit the bottom line hard, any suitor would likely insist on control. A buyer of the MOL stake could try to mop up some of the 5% free float; however, that would not be enough to raise the Croatian stake to a majority.

Regardless, a US State Department official is reported to have asked a US senator to drop in to Croatia recently to lobby the government on the issue. Amos J. Hochstein also met Hungarian Foreign Minister Peter Szijjarto in Washington In October, according to Reuters. Officials said the pair had a "productive meeting" talking about MOL's stake in INA, the Russian-led South Stream gas pipeline project and Hungarian gas deliveries to Ukraine, among other issues.

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