May 30, 2012 / 1:07 PM / in 5 years

Croatia clashes with MOL over oil firm INA

ZAGREB, May 30 (Reuters) - Tensions between Croatia and Hungarian oil and gas group MOL over their INA oil business flared up on Wednesday, as the country accused MOL of stifling the output of local refineries and focusing on importing oil derivatives instead.

“The refineries are working at a low capacity and we are importing derivatives instead. That is conducive to closing the refineries, which is intolerable,” Croatian finance minister Slavko Linic told reporters.

“That is not the policy of this government and that should not be the policy of INA’s owners,” Linic said while presenting a new line of cheaper loans for small businesses, set up by the state development bank HBOR and commercial banks.

MOL officials contacted by Reuters declined to comment.

Linic and Economy Minister Radimir Cacic hope to be appointed to INA’s supervisory board, made up of Croatian and Hungarian representatives.

MOL owns almost 50 percent of INA and the Zagreb government has a 44.84-percent stake. Their relations have been strained over management rights, with Croatia accusing MOL of exercising full control of INA although it is not the majority owner.

Croatia wants to redefine the management structure and shareholders agreement, but talks have yet to start.

Last September, Croatia, which is due to join the European Union next year, indicted its former Prime Minister Ivo Sanader for allegedly taking a bribe from MOL in 2008 in exchange for securing MOL’s dominant position in INA.

Both Sanader and MOL have denied the charges. Relations soured further during the trial, when Croatian members of INA’s management board told the Zagreb County Court the Hungarians were taking all the decisions in Budapest without consulting their Croatian partners.

INA has both upstream and downstream businesses and operates gas and oil exploration at home, in the Middle East and in Africa. It had to temporarily suspend activities in strife-torn Syria as Croatia joined EU sanctions against the country.

Its revenues in the first quarter rose five percent, but the net profit more than halved to 412 million kuna ($68.2 million)from 1.05 billion kuna the year before due to capped gas prices, lower demand and loss of income from Syrian oilfields.

$1 = 6.0383 Croatian kunas Reporting by Zoran Radosavljevic; Editing by Mark Potter

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