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Austrian energy firm OMV withdrew its takeover bid for Hungary's MOL -- a move that will lead to a fierce competition and could benefit Gazprom. (With Stratfor map)

The partially state-owned Austrian energy company OMV withdrew its $18.4 billion hostile takeover bid for Hungary’s privately owned MOL — the largest company in the country — on Aug. 6. The decision came under pressure from the European Union commission, which was concerned the merger would hurt consumers and competition, notwithstanding the efforts OMV made to try to allay Brussels’ fears by selling off parts of its refining network to Vienna and Bratislava.

MOL’s hostility toward the OMV offer and Brussels’ disapproval of the takeover effectively killed the merger. The failed bid leaves OMV and MOL to fight out their rivalry over the Balkans. Their different strengths would have perfectly complemented each other in a bid to dominate the Central European energy market: MOL has the infrastructural connections to the Balkan Peninsula, and OMV has the necessary cash and supplies. Instead the two companies will compete in a dead heat with no clear winner expected to emerge any time soon. The stalemate could allow Russian energy players to profit from the disunity between MOL and OMV. In particular, Russian natural gas monopoly Gazprom — which has expressed interest in taking over MOL in the past and has a close working relationship with OMV — could look to join the fray between the two Central European energy giants.

OMV first bid for MOL in 2007, when OMV increased its stake in the Hungarian firm from 10 percent to 20 percent. The move was met with fierce resistance from the Hungarian government and MOL’s management. In part, the Hungarians were wary of OMV’s close and strong links to Gazprom, particularly because there was a fear that the Russian behemoth was using OMV to try to take over MOL.