ZAGREB, January 15, 2019 - Environment and Energy Minister Tomislav Coric said on Tuesday that the government wanted a successful and profitable INA, adding that this required restructuring of this oil company's refineries. He also spoke about the LNG terminal.

"The aim of the government is to ensure a successful, profitable and vertically integrated INA. A successful and efficient INA has no alternative," Ćorić told a press conference dedicated to energy issues.

He, however, added that this wish does not correspond with the present state of INA's oil refineries, as the one at Rijeka operates at 70 to 80 percent capacity and the one at Sisak at 30 percent.

Ćorić said that the planned transformation of the Sisak plant would ensure the largest possible employment and that it was tied to investment in the Rijeka refinery and other business segments. He noted that the conversion of the Sisak refinery into an industrial centre has been decided by INA's management and supervisory boards and it "has no alternative, regardless of the size of the government stake in INA."

Asked if he had any message for the workers at Sisak, he said that their future would not be uncertain and that under the business plan 40 to 50 percent of them would be retained at the Sisak complex.

Ćorić said that the government had not abandoned its idea to buy back the Hungarian energy group MOL's stake in INA, noting that this was a very complex process.

Asked if the proposed legislative changes could make it possible for MOL to acquire a majority stake in INA, Ćorić said that if MOL or any other company had such an intention it would first have to present its long-term plan for INA to the government to see that this would not have an adverse effect on the country's energy stability.

The proposed amendments to the INA Privatisation Act are under public consultation until January 22. Their purpose is to align this law with EU legislation.

When explicitly asked if there was a deal with the Hungarians to leave INA to them, Ćorić replied in the negative.

Speaking of Croatia's plan to build an LNG terminal on the northern Adriatic island of Krk, Ćorić recalled that the state-owned power company HEP had booked 520 million cubic metres of the terminal's capacity, while the booking of 1.5 billion cubic metres was required to make the terminal profitable, and that two letters of intent had come from Hungary inquiring about the possibility of entering the ownership structure of the future terminal.

Despite the modest interest in the booking, Ćorić said that "as long as this government is in office, the LNG will be without an alternative the dominant energy project."

He announced further talks with the Hungarians, saying that this was a strategic project, not only for Croatia, which could become increasingly dependent on gas imports, but also for Europe, especially for countries such as Hungary and Ukraine.

Asked about the possibility of renewing oil and gas exploration and exploitation in the Adriatic, Ćorić said that there were indeed indications of considerable quantities of gas existing in the Adriatic, that he was "neither in favour nor against" and that a consensual decision should be taken on this issue.

More news on the LNG terminal project can be found in the Business section.

ZAGREB, January 3, 2019 - Environment and Energy Minister Tomislav Ćorić said on Thursday, while commenting on the business transformation of the INA oil company, that the government was insisting that as many Sisak oil refinery workers as possible should be retained.

He dismissed claims that he and State Assets Minister Goran Maric disagreed on the issue of the Sisak refinery.

"What Minister Marić said in 2016 and what we have been saying all long is that INA should be a vertically integrated company. We believe that modernisation of INA's refining business has no alternative and an investment of between 3.5 and 4 billion kuna that will be made in that regard is necessary," Ćorić told the press outside the government headquarters.

"There are no differences of opinion between us. It was necessary to insist on maintaining employment in Sisak-Moslavina County. Marić's statement should be viewed in a wider context. The question of the refining business in 2016 and in 2018 is not the same," he added.

Marić said in 2016 that he would not allow the closure of the Sisak oil refinery because of its importance for the local economy. "I would sooner leave politics than allow its closure," he said then.

Under its business plan for 2019, INA will concentrate its oil refining business at the Rijeka refinery, while the Sisak refinery will be converted into an industrial centre focusing on other activities.

Ćorić said that the Sisak plant was currently operating at about 30 percent of its capacity, while the Rijeka refinery was operating at 70 percent. "Croatia needs INA as a strong energy company. It needs an efficient and successful INA that will be competitive and profitable," he added.

Asked what would happen with workers at Sisak as part of INA's business transformation, Ćorić recalled the conclusions of the business plan adopted at the end of last year, under which between 40 and 50 percent of workers at Sisak would remain in the plants that would continue operating.

As for the rest of the workers, a comprehensive redundancy programme has been prepared by the management and they will also have an option of working in other business areas of INA, the minister said.

More news on the INA oil company can be found in our Business section.

ZAGREB, January 2, 2019 - State Assets Minister Goran Marić said on Wednesday that neither the government nor he could do anything about the closing of the refinery in Sisak because that was the decision of the INA oil company's management, adding that he was still advocating for not closing the plant.

"The state assets minister and the government can't make business decisions for any company," he told reporters when asked if the government had done enough to prevent the closure of the Sisak refinery.

Asked if he would keep his promise from the 2016 election campaign that he would leave politics if the refinery was closed, Marić said he was still advocating for not closing the plant.

He said he was politically advocating that contractual obligations be met, that management consider whether the closure was justified, but added that business decisions in any company were made by management and the supervisory board. "As a minister, I can't exert pressure on anyone," he stressed.

Asked if INA was a state asset in any way, he said it was not and that the government only had shares in it, reiterating that business decisions concerning INA were made by the management and the supervisory board.

Marić said he would continue to insist on the adoption of decisions in Croatia's interests, and that not closing the Sisak refinery was in Croatia's interest.

Asked if the government and Prime Minister Andrej Plenković were pushing hard enough for what he was pushing for, he said that as an economist he mostly supported production and that during the election campaign they pushed for salvaging the Petrokemija fertiliser manufacturer and against closing the Sisak refinery.

He said Petrokemija was salvaged and that "the State Assets Ministry had a crucial role in its recapitalisation, but it certainly can't have decisive influence on the closure of the refinery."

More news on the Sisak refinery can be found in our Business section.

ZAGREB, December 22, 2018 - The MOST party said on Friday that by "stalling and abandoning plans for INA's buyout, the Plenković cabinet is making it possible for Hungarian oil and gas group MOL to blackmail Croatia into the announced closing of the Sisak refinery."

Asking Prime Minister Andrej Plenković what his Hungarian counterpart Viktor Orban had blackmailed him with, MOST wonders in a statement what "Croatia will get if Plenković has allowed Hungarians to close the refinery in Sisak and let them enter Petrokemija's management. They will soon start exporting INA's gas to themselves and who knows what else is in the offing? Isn't the price of Hungary's merciful blackmailer involvement in the LNG terminal, whereby Plenković is showing his commitment to the EU by seeking a future office in the Commission, too high?"

MOST further says that Prime Minister Plenković has personally appointed the Croatian members of the management of the INA oil company (jointly owned by Croatia and MOL) but that they are not representing INA's interests.

In the shareholders agreement on INA, MOL has undertaken to be a strategic partner but it has taken over INA's market and turned the company into an oil retailer, MOST says, claiming that Hungary is protecting its interests in a sovereign way while the Croatian government is incapable of organising a tender to buy back MOL's stake in INA.

SDP president Davor Bernardić visited Sisak to meet with Predrag Sekulić, unionist and spokesman for Sisak refinery workers, for talks on the current situation in the refinery following a decision by the INA oil company to stop refining oil in Sisak.

INA, which is owned jointly by Croatia and the Hungarian oil and gas group MOL, announced on Wednesday that it would concentrate its refining business in Rijeka, while the Sisak refinery would be converted into an industrial centre focusing on other activities.

"Had Plenković stuck to his pre-election promise of two years ago and restored Croatian ownership of INA, the Sisak refinery would not be facing closure. This government has not done anything in that regard and will be remembered for making the workers of Uljanik, 3. Maj and the Sisak refinery jobless," Bernardić said.

The SDP leader also wondered if the closure of the Sisak refinery and possible dropping of an indictment proposal against MOL executive Zsolt Hernadi had been agreed at recent talks between Plenković and Hungarian Prime Minister Viktor Orban in exchange for Hungary's withdrawal of an arbitration lawsuit against Croatia in the INA case.

More news on the INA-MOL case can be found in our Business section.

ZAGREB, December 21, 2018 - The news that production at the Sisak oil refinery will be closed, although expected, disquieted workers on Thursday, and their spokesman Predrag Sekulić said they were "confused by the absence of a clear reaction from the government."

The arguments given by the INA oil company in favour of discontinuing production at Sisak are unconvincing and unilateral, he said, adding that workers are not surprised by the news.

"This is just a confirmation of our claim that the acquisition of INA by the Hungarian energy group MOL was a hostile takeover. We, however, are confused by the absence of a clear reaction from the government, whose representatives have said several times that they will push for the continuation of production and survival of the Sisak refinery," Sekulić told Hina.

He said that the union and workers were meeting on Friday to discuss their further steps.

INA announced on Wednesday that it would concentrate its refining business in Rijeka, while the Sisak refinery would be converted into an industrial centre focusing on other activities.

If the Sisak refinery is shut down, it will lead to further emigration and dying out of the local economy and other sectors, President Kolinda Grabar-Kitarović said in Varaždin on Thursday.

Asked if she could join in efforts to deal with the planned closure of the Sisak oil refinery, which could also be seen as a matter of national security, Grabar-Kitarović said that she would become involved, in line with her constitutional powers, because she was not authorised to make any decisions in that regard.

"I will definitely be in talks with both the Croatian and the Hungarian side with a view of keeping the refinery running because those jobs really need to be saved. Otherwise we will face further emigration and dying out of the local economy and other sectors," she said.

Varaždin County Prefect Radimir Čačić, who met with the president, said that the MOL oil and gas company had been planning for a long time to close down the Sisak oil refinery and that there was a conflict of legitimate Croatian and Hungarian interests in that case.

The Sisak refinery is part of INA, which is owned jointly by the Croatian state and the Hungarian oil and gas group.

"Under the initial agreement, Hungarians could in no way close down the refinery. Moreover, they undertook to upgrade and develop it further. The terms of those initial agreements have evidently been changed and the incumbent government lacks the strength to prevent the closing down of the plants," Čačić said, adding that the closure of the refinery was more a matter of the loss of a vital type of production than a matter of job loss.

"Most of the workers will probably get decent severance packages, retire or... there will be a switch to alternative production – the processing of the already processed oil products and their storage. The number of workers will not be reduced significantly. This is first and foremost about the loss of strategic production, that's the problem," said Čačić.

More news on the INA-MOL case can be found in our Business section.

ZAGREB, December 20, 2018 - Energy Minister Tomislav Ćorić commented on Thursday on oil company INA's business plan for 2019, saying it was about an investment cycle that would lead to the necessary modernisation of the refining business and that the transformation of the business in Sisak was the path INA should take. The plans call for the closure of Sisak refinery.

Responding to questions from the press ahead of a cabinet meeting, Ćorić said the company's management and supervisory boards had supported a plan to transform the business in Sisak. "I think INA should first and foremost become a business case and less a subject of politicisation."

Asked if that meant the end of refining in Sisak, Ćorić said the transformation of the business there had been analysed by management and that it was "simply the path INA should take."

INA plans to concentrate its refining business in Rijeka, while the Sisak refinery would focus on other activities, the company said on Wednesday.

Asked about Hungarian energy group MOL's withdrawal of a suit it brought against Croatia before a Washington district court, Ćorić said the suit was groundless as all of MOL's receivables from Croatia were paid over a year ago.

More news on the future of INA can be found in our Business section.

ZAGREB, December 20, 2018 - Prime Minister Andrej Plenković said on Wednesday he was not surprised by the decision by the Hungarian energy group MOL to withdraw its lawsuit against Croatia in INA-MOL case.

Asked by the press whether the move was a sign of goodwill or was connected with his recent meeting with Hungarian Prime Minister Viktor Orban, Plenković answered that "this decision was made well before the Hungarian prime minister's visit to Zagreb." "We are trying to resolve the accumulated problems which, because of the INA-MOL file, burden relations between Croatia and Hungary," Plenković told reporters.

Asked why Croatia had still not bought back MOL's stake in the Croatian company INA, given that he had announced this plan two years ago, and whether there was enough money for this given that contracts with consultants had not been signed yet, Plenković said that money and consultants were two different things.

"Consultants have been selected after several tenders. The dilemma here is who is responsible for what based on the tender issued. The government and the selected consultants have different opinions," he said, adding that this was a technical issue which was being dealt with by two ministries.

Večernji List newspaper said on Wednesday that MOL had unexpectedly and without any explanation withdrawn its lawsuit against Croatia, filed with a Washington district court.

Last year the Hungarian company asked the US court to recognise and accept a ruling by the United Nations Commission on International Trade Law (UNCITRAL) in Geneva which two years ago ruled in favour of MOL and against Croatia. The lawsuit in that case was launched in 2014 by the Zoran Milanović government, and Croatia requested UNCITRAL to annul changes to a 2009 agreement on management rights in the INA oil company, jointly owned by MOL and Croatia, as well as a master gas business agreement, signed during the term of the Ivo Sanader government.

According to documents from the Washington court, MOL asked that the United States confirm, recognise and apply UNCITRAL's final ruling of 23 December 2016, referring to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, also known as the New York Convention, of which Croatia is a signatory.

This would mean that the US judiciary should treat the Geneva tribunal's ruling as if it had been made by a US court and its enforcement was subject to US laws.

In the first version of its lawsuit, MOL also asked that Croatia should pay 14.5 million euro in costs it was ordered to pay by the court, which Croatia did, after which MOL confirmed that Croatia had settled the debt but not the interest and proceeded with the case.

The US court on 13 November 2017 informed the Croatian Economy Ministry that a lawsuit had been filed against it.

The penultimate document on this case from the US court was released on April 18, 2018, when Croatia was given an extension of the deadline until 28 September to prepare for the case, but five days before the deadline expired, on September 24, information arrived from the court that the plaintiff had voluntarily withdrawn the complaint, Večernji List says, stressing that MOL officials did not want to comment on the withdrawal of the lawsuit.

Many see the withdrawal of the lawsuit as a tactical move whereby MOL wants to additionally strengthen its position in ongoing arbitration proceedings it launched in Washington in 2013.

Croatia's launching arbitration proceedings before UNCITRAL in 2014 was a response to MOL's arbitration lawsuit.

Following the decision by UNCITRAL to dismiss Croatia's motion to nullify the 2009 agreement on management rights in INA and the master gas business agreement, Prime Minister Plenković said that the government had decided to claim back full ownership of INA by buying MOL's stake in it.

More news on the INA-MOL case can be found in our Business section.

ZAGREB, December 19, 2018 - The Hungarian oil and gas company MOL has unexpectedly and without any explanation withdrawn its lawsuit against Croatia filed with a Washington district court, the Večernji List daily of Wednesday reports.

The Hungarian company in 2017 asked the US court to recognise and accept a ruling by the United Nations Commission on International Trade Law (UNCITRAL) in Geneva which two years ago ruled in favour of MOL and against Croatia.

The lawsuit in that case was launched in 2014 by the Zoran Milanović government, and Croatia requested UNCITRAL to annul changes to a 2009 agreement on management rights in the INA oil company, jointly owned by MOL and Croatia, as well as a master gas business agreement, signed during the term of the Ivo Sanader government.

Sanader is currently on trial on the charges that he received a bribe from MOL company CEO Zsolt Hernadi, who is beyond the reach of Croatian authorities, in exchange for ceding management rights in INA to the Hungarian company. Also indicted in this case is Hernadi.

According to documents from the Washington court, MOL asked that the United States confirm, recognise and apply UNCITRAL's final ruling of 23 December 2016, referring to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, also known as the New York Convention, of which Croatia is a signatory.

This would mean that the US judiciary should treat the Geneva tribunal's ruling as if it had been made by a US court and its enforcement was subject to US laws.

In the first version of its lawsuit, MOL also asked that Croatia should pay 14.5 million euro in costs it was ordered to pay by the court, which Croatia did, after which MOL confirmed that Croatia had settled the debt but not the interest and proceeded with the case.

The US court on 13 November 2017 informed the Croatian Economy Ministry that a lawsuit had been filed against it.

The penultimate document on this case from the US court was released on April 18, 2018, when Croatia was given an extension of the deadline until 28 September to prepare for the case, but five days before the deadline expired, on September 24, information arrived from the court that the plaintiff had voluntarily withdrawn the complaint, Večernji List says, stressing that MOL officials did not want to comment on the withdrawal of the lawsuit.

Many see the withdrawal of the lawsuit as a tactical move whereby MOL wants to additionally strengthen its position in ongoing arbitration proceedings it launched in Washington in 2013.

Croatia's launching arbitration proceedings before UNCITRAL in 2014 was a response to MOL's arbitration lawsuit.

Večernji List notes that it is an interesting coincidence that on September 12 European Parliament members from the Croatian Democratic Union (HDZ) supported Hungarian Prime Minister Viktor Orban in the European Parliament, after which Hungary lifted its blockade of Croatia's bid to join the Organisation for Economic Cooperation and Development (OECD), while on September 24, MOL withdrew its lawsuit against Croatia before the US court.

Following the decision by UNCITRAL to dismiss Croatia's motion to nullify the 2009 agreement on management rights in INA and the master gas business agreement, incumbent Prime Minister Andrej Plenković said that the government had decided to claim back full ownership of INA by buying MOL's stake in it.

More news on the INA-MOL case can be found in our Business section.

ZAGREB, December 5, 2018 - Prime Minister Andrej Plenković said on Tuesday that, if Croatia and Hungary failed to reach agreement on the price at which MOL's stake in the INA oil company would be bought back by Croatia, that problem would become insurmountable because no one was in a position to set aside more funds than they could or should.

Responding to a reporter's question at a news conference after a summit of the Central European Initiative (CEI) in Zagreb, Plenković said that Hungary and Croatia had different views on the issue of the INA oil company. "The price of restoring Croatian ownership of INA is not something that can be negotiated overnight nor is it that simple. Quite the contrary, we are aware of its complexity and ultimately, if we do not agree on a price, in my opinion, that may become an insurmountable problem because nobody can set aside more funds than they can or should," said Plenković.

The Croatian government has estimates, he said. "We have rough estimates. What varies are broader details that can be important for energy companies, their future prospects and relevant global trends. However, we haven't done anything wrong in this case, quite the contrary, I believe that our decisions have been good and that that fact has even helped deal constructively with certain processes and problems. That was the content, spirit and tone of our meeting yesterday," said Plenković.

He reiterated that after his meeting with Hungarian Prime Minister Viktor Orban in Zagreb on Monday it was concluded that relations between Croatia and Hungary were very good and free of outstanding issues in terms of their good neighbourly relations, as well as that there were no problems in the two countries' relations regarding INA and MOL.

Prime Minister Orban said yesterday that Hungary saw the INA-MOL situation as an issue concerning the two companies.

In late 2016, Plenković said that the Croatian government had decided to restore its ownership of the INA oil company by buying back MOL's stake in INA, after Croatia lost a case filed against MOL before the United Nations Commission on International Trade Law in Geneva.

In mid-January last year, the government formed a council for negotiations with MOL regarding the possible purchase of shares held by that Hungarian company in INA, and in April this year it selected a consortium consisting of Morgan Stanley, Intesa Sanpaolo Group and Privredna Banka Zagreb as its investment consultant for the possible purchase of the stake and its possible subsequent sale to INA's new strategic partner. However, a contract with the consultants has not been signed yet.

For more on the INA-MOL problems, click here.

The Summit of the Central European Initiative (SEI), which brought together the heads of state of six countries in Zagreb, saw the Hungarian Prime Minister, Viktor Orban, arrive in Croatia. Despite talks between the two leaders, the INA-MOL situation remains without real direction.

As Jadranka Dozan/Poslovni Dnevnik writes on the 3rd of December, 2018, this opportunity, as was well understood by the involved parties, was also used for bilateral talks between the Hungarian PM and Croatian Prime Minister Andrej Plenković. After the meeting, there were more or less protocol words and a few statements decorated with positive intonations released. The talk, according to Plenković, showed the desire of both countries to continue to develop economic cooperation as well as the good will to overcome existing problems primarily regarding INA and MOL, so as to solve and not further endanger the development of relations in all other areas.

Orban isn't quite as diplomatic as the ever-polished Plenković in his view, and in his opinion it isn't normal that two neighbouring states which look to each other as allies have allowed six or seven years to pass since the last official visits between their respective prime ministers.

"During the last few months, we've conducted numerous negotiations, and today I came to bring our relations back," Orban said, recalling that cooperation with Croatia began back in the 1990s with an advocate in the Hungarian parliament, and underlining the fact that he was a friend of President Franjo Tudjman. This will result in a new dialogue between the two neighbouring governments, it's too early to talk in any real detail, but talks on the energy sector are expected, as well as those over the ongoing INA-MOL situation and the question of Hungary's interest in the LNG terminal project on the island of Krk. Despite the aforementioned, the talks between the two prime ministers certainly weren't focused purely on neighbourly relations in terms of business and energy strategies.

Justice had its part to play in the talks. On the one hand, there is the arbitration dispute at the International Settlement of Dispute Settlements in Washington, and other disputes over the request of the Croatian judiciary for the extradition of Zsolt Hernadí of Hungary's MOL.

From the aspect of energy strategy and business, especially in light of the declarative plan of the Croatian Government on the purchase of MOL's stake in INA, the appearance of Minister Tomislav Ćorić on Sunday was very indicative.

The day before talks with the Hungarian side over the INA-MOL situation were due, Minister Ćorić confirmed that the Croatian Government had not yet signed a contract with the investment advisory consortium for the INA project, which was chosen back in April, after a multi-month process which was characterised by several so-called "extensions".

According to the minister, a contract with a consortium in which Morgan Stanley, Intesa Group and PBZ are involved has not yet been signed owing to the fact that when conversation with them following the initial selection, "points around which there was no complete understanding" arose. Despite this, Minister Ćorić claims that "they're currently being resolved". This raised numerous questions from the side of experts and left them wondering what the situation would be like if international consultants hadn't stepped in.

Meanwhile, there were more meetings between representatives of the Croatian Government and Hungarians, and one can quite easily conclude that these talks were without any real specific focus. Most of the bigger problems appear to lie with the sheer lack of clear views on what strategic goals need to be achieved and in which development segments the Croatian Government intends to place the most emphasis.

As with most things in Croatia, the path to solving the INA-MOL situation is littered with obstacles and appears to be very far from a solution, regardless of the apparent good will on both the Croatian and the Hungarian side.

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Click here for the original article by Jadranka Dozan for Poslovni Dnevnik