Croatian oil/gas firm INA says its Drava exploration licenses revoked again

By bne IntelliNews February 25, 2015

Croatian oil and gas company INA said on February 24 the economy ministry revoked again its exploration licenses in Drava area despite the fact that a verdict of the High Administrative Court restored it in January. Croatia’s decision will put even much pressure on the already tensioned relation with the other major shareholder in INA, Hungary’s MOL.

The licenses were first revoked by the country’s economy ministry in July 2011.

“Since the company finds the decision legally unfounded, it will initiate administrative proceedings in order to annul it,” INA said in a statement filed with the Zagreb Stock Exchange.

In November last year, the economy ministry also withdrew INA’s exploration licenses in Sava and North-Western Croatia exploration areas.

INA stressed the fact that all three revoked licenses overlap with the blocks of the recently finished Croatian onshore exploration bid round.

Last week, Croatia said it has received seven bids in a tender for onshore exploration and production of hydrocarbons in the north-eastern part of the country,

“Once again we point out that as the result of mentioned decisions of the Ministry of Economy, on top of the already 3 years passing, prepared projects for these areas could not be realized, causing losses to the company, local and national budgets and preventing the company from maintaining and growing its investments into exploration in Croatia,” the statement added.

Croatia owns a 44.85% stake in INA, while MOL holds a 49.1% stake and is in charge with its management. The two shareholders have been in ongoing dispute over INA’s management rights which resulted in both sides filing arbitration suits against each other, bribery charges for MOL's CEO Zsolt Hernadi, and the imprisonment of former Croatian Prime Minister Ivo Sanader.

Croatian media has recently reported that the government has drafted amendments to the legislation regarding the privatisation of INA that will prevent MOL from selling its stake in the company without the government’s approval.

Both parties have suggested on numerous occasions over recent years that they are ready to sell their stakes. The US has even been brokering talks between MOL and Zagreb in late 2014 in a bid to find a solution and block any Russian interests from entering INA, which not only sits on promising deposits, but crucially is key to a plan to build a liquefied natural gas (LNG) terminal in the Adriatic - part of the push to diversify European gas supplies.

At the beginning of this year, MOL group’s CEO Jozsef Molnar said the company is in talks with potential buyers for its stake in INA.

 Croatia has also expressed its interest in buying back MOL’s stake, but such a move is unlikely due to the country’s empty coffers following six consecutive years of recession.

 

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