A dispute between Hungary and Russia could bode well for shares of the Sharjah company Dana Gas. The ties between the parties involved in the deal are somewhat tangled. They go back to an agreement last year for Dana Gas to acquire 10 per cent of the Hungarian petroleum company MOL in exchange for letting MOL join a consortium drilling for gas in the Kurdistan Pearl Project.
Also last year, the Russian oil firm Surgutneftegas acquired 21 per cent of MOL for ?1.4 billion. But the partnership quickly went sour. The company has been blocked from registering as a MOL shareholder and now the Hungarian government is making noises about buying out its stake. "The government is simply not happy with the Russian influence. There is a lot of energy geopolitics going on," said Peter Attard Montalto, the Hungary economist at Nomura in London.
Hungary's ministry for national development and economy said it started talks with Surgutneftegas as part of the government's focus on strengthening the state's role in the energy sector. "The Hungarian government is committed to strongly asserting the national interest in every strategic area," the ministry said. "In this spirit, it has begun talks with Russia's Surgutneftegas." The benefit to Dana Gas would come if Hungary paid a premium for Surgutneftegas's shares, which would also boost Dana's share value. Shares of MOL rose after the Hungarian government's announcement last Wednesday.
There is also widespread belief that Dana shares have rallied on the back of speculation that the acquisition will be completed. The shares have added more than 6 per cent in the past week, closing yesterday at Dh0.86. But there is a note of caution: given an estimated 3 per cent deficit in the budget for Hungary next year, analysts say the deal may not happen quickly. Mr Montalto said he did not believe the deal could be done until the middle of next year.
halsayegh@thenational.ae
