ZAGREB, March 17, 2020 - The Council for INA on Tuesday accepted a report by its investment consultant on the course of due diligence in the Croatian oil company, defining the course of further activities for the possible purchase of INA shares held by the Hungarian oil and gas group MOL.

An analysis by the investment consultant on company's operations and value is expected in the second quarter, the government said in a statement.

The INA Council, an advisory body tasked with providing guidelines, taking action and putting forward proposals to the government regarding preparations for, implementation and financing of the possible purchase of MOL's stake in the company, held its 11th meeting today under the chairmanship of Prime Minister Andrej Plenković.

Representatives of the Lazard investment consultant and other professional consultants submitted a report to the Council on the course of due diligence in INA via video link.

"The Council accepted the report and determined the course of further activities in the process of the possible purchase of MOL's interest in the company, as part of which an analysis by the investment consultant of the company's operations and value can be expected in the second quarter of this year," said the government.

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As Poslovni Dnevnik/Vecernji list writes on the 22nd of January, 2020, the Belgian company De Smet Engineers & Contractors (DSEC) has announced that they have begun work on a basic engineering contract for INA, which covers part of a project to build a second-generation bioethanol plant in the continental Croatian city of Sisak.

That being said, a statement claims that "DSEC will also integrate the selected process package into the project study and evaluate the associated capital and operating costs."

When completed, the project will enable INA to validate the planned construction of the Sisak plant, which INA promised as part of the compensation measures following the announcement of the closure of the basic refinery at the Sisak refinery. DSEC also noted something similar in their announcement, pointing out that the project aims to "establish sustainable industrial activity as an alternative to the Sisak oil refinery".

The value of the contract and work is not yet known and hasn't been publicly stated, but it is part of the activities kickstarted back in 2017 by INA in connection with the planned production of bioethanol in Sisak.

The plan is for the biorefinery to have an annual capacity of 55,000 tonnes of second-generation (2G) bioethanol, and will use locally grown miscanthus and lignocellulosic biomass, such as cereals and oilseeds, for the raw material.

According to the Environmental Impact Study of the Future Bioethanol Plant of 2017, the production of electricity for use from renewable sources (residues of biomass from production and, if necessary, wood chips) and the production of carbon dioxide produced in bioethanol production, are considered to be an increase in oil recovery.

For the planned production capacity, the annual quantity of raw material needed is estimated at 370,000 tonnes in total, which INA intends to secure by collecting agricultural residue directly from the fields and growing energy plants 75 kilometres in diameter around the city of Sisak.

Several months ago, INA completed miscanthus testing for biofuel production, saying that the test results were optimistic because they showed that sunliquid technology could successfully process miscanthus into lignocellulosic sugar and ethanol.

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As Darko Bicak/Poslovni Dnevnik writes on the 13th of December, 2019, according to INA, the decision on a heavy-waste treatment facility comes one year after the announcement of INA's R&M New Direction 2023 program, which aims to transform INA's refining system to generate profits instead of losses.

Today, INA made a decision to invest a massive four billion kuna in a heavy waste treatment plant at the Rijeka Oil Refinery. As was explained during an extraordinary press conference in Zagreb, the company's supervisory board gave its prior approval for the construction of the Heavy Duty Processing Facility in Rijeka, and INA's management board then made a unanimous decision on the investment. Works on the new plant will begin early next year, they say, and it is expected to start operating at some point in 2023.

Sándor Fasimon, CEO of INA, said the decision on the heavy-duty processing plant marks an important step in the implementation of the R&M New Direction 2023 program, as well as an important moment in the company's history as it is the largest investment INA has made in decades.

"With this decision, the Rijeka Oil Refinery will be transformed into a modern European refinery while ensuring that INA maintains a leading position on the market. It's a major investment that will significantly affect the company's operations in the future," said Fasimon.

The chief executive officer of the MOL Group and the deputy chairman of INA's supervisory board commented that this decision confirms the MOL Group's commitment to INA. "By constructing a heavy waste treatment plant, we'll significantly increase the complexity and efficiency of the Rijeka refinery. I firmly believe that this investment will have a significant positive impact on the company's profitability in the future,'' said Molnar.

Tomislav Ćorić, Minister of Environment and Energy, said that the announcement of about four billion kuna in investment over the next three years is the most wonderful Christmas gift to Croatia that could be expected.

''Today's decision to launch the modernisation project of the Rijeka Oil Refinery is a major step forward. This is one of the biggest investments in our energy sector and I'm glad that it was realised precisely during the term of this current government. This investment will improve the product structure of Rijeka, increase profitability and improve the company's competitiveness in the field of environmental protection by significantly reducing CO2 and other harmful gases,'' stated Minister Ćorić.

A year ago, Prime Minister Andrej Plenković promised us a "Christmas present" in the form of an announcement that Croatia would go ahead with the purchase of MOL's stake in INA.

According to INA, and as previously mentioned, the decision on this treatment facility comes one year after the announcement of the R&M New Direction 2023 program. The program includes the concentration of crude oil processing activities in the Republic of Croatia at the Rijeka Oil Refinery and, as part of this, the conversion of the Sisak Oil Refinery into an industrial centre that will cover the production of bitumen, which was approved in March this year and is set to launch in 2021.

Still to come is a logistics hub and, potentially, lubricant production and even a bio-component refinery. With the implementation of all activities covered by the INA R&M New Direction 2023 program, after 2023, INA expects an average annual EBITDA growth of over 1 billion kuna in total.

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ZAGREB, November 15, 2019 - Croatia's INA oil company intends to buy the Banja Luka-based Krajinapetrol company to expand its existing network of petrol stations in Bosnia and Herzegovina, the Bosnian business news website capital.ba said on Friday.

According to capital.ba, INA has received the green light from Republika Srpska's (RS) Energy and Mining Minister Petar Đokić that it can conduct due diligence at Krajinapetrol before making a final decision on the possible purchase of a majority stake.

Krajinapetrol's current majority owner is the entity's government and related shareholders' funds, while INA currently owns 9.7% of the company's shares. The company emerged after the former Yugoslavia disintegrated and the RS authorities took over the petrol stations and infrastructure that INA had owned in Bosnia and Herzegovina during the time of Yugoslavia.

Krajinapetrol now manages a network of 15 petrol stations mostly distributed in and around Banja Luka.

Financial indicators show stable business operations and a growing revenue, which this year has increased by 2.5 million euro from 2018.

Krajinapetrol's total capital is estimated at 12 million euro and the company currently employs 168 workers.

INA has the largest retail network for oil derivatives in Bosnia and Herzegovina, with 45 petrol stations which were originally limited to the Bosniak-Croat Federation entity but later began to expand to the Bosnian Serb entity.

More news about the Croatian national oil company can be found in the Business section.

ZAGREB, October 28, 2019 - INA Group's revenue in the first nine months of 2019 totalled 16.55 billion kuna, two percent more than in the same period of 2018 while the group's profit dropped by 36% to 679 million kuna, shows a financial report the group released on Monday.

CCS EBITDA excluding special items amounted to 2.397 billion kuna, improving 8% compared to the same period last year. The average oil prices decreased somewhat during the first nine months of 2019, therefore the reported EBITDA amounted to 2.208 billion kuna and profit amounted to 679 million kuna, the group said.

The group notes that the first nine months of this year were an intensive investment period.

"CAPEX increased by 69% compared to the same period last year and amounted to 1,541 million kuna, mainly driven by refining investments. Investments in Croatia amounted to 1,319 million kuna, more than double compared to the same period last year. Net gearing amounted to 21% with net debt at 3,036 million kuna," the group said.

Sandor Fasimon, President of the Management Board of INA, said in a comment that the company's intensive investments in the first nine months had started to show results.

"Total investments exceeded 1.5 billion kuna, majority of which was spent domestically. Rijeka refinery turnaround, as one of the largest ones in the company’s history, was completed. Numerous improvements implemented during this turnaround are already visible in the better production structure, with a higher share of profitable white products. This is also to be further improved with future expected projects, in line with the INA Downstream 2023 New Course program.

"Also, the increased level of Upstream activities in Egypt is starting to give results with a 23% increase of oil production in Egypt. This, together with the continuous workover activities in Croatia, currently stabilized the hydrocarbon production impacted with natural decline," Fasimon said.

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ZAGREB, October 23, 2019 - The INA oil and gas company on Wednesday marked the 20th anniversary of continued production of natural gas in the Adriatic Sea.

"In the last 20 years over 21 billion cubic metres of gas has been extracted by 18 platforms in the northern Adriatic. These figures encourage us to make further progress in the exploration and exploitation of hydrocarbons in Croatia, primarily in the northern Adriatic which offers the potential which I believe we will know how to use," Environment and Energy Minister Tomislav Ćorić said at a ceremony held on the Ivana A platform, located 36 kilometres from the nearest mainland.

Ćorić stressed that hydrocarbon exploration and exploitation was being conducted in line with the highest environmental protection and safety standards. "Successful projects like this testify to the importance of strategic and responsible management of resources with a view to developing the economy and increasing the share of domestic production."

Ćorić visited the platform in the company of INA CEO Sandor Fasimon and the head of the Agency for Hydrocarbons, Marijan Krpan.

Fasimon said: "The purpose of our oil and gas exploration and production activities is to maximise the existing potential domestically, both offshore and onshore. We have incorporated this into our development plans because 15 years from now we want to be proud of our company and remain a reliable partner to the Croatian economy."

Krpan said that the Northern Adriatic project was very demanding in terms of technology and concept and that it put Croatia among countries with the know-how for offshore hydrocarbon production.

Ćorić recalled that INA had begun hydrocarbon exploitation in the northern Adriatic in 1999 and that it was an excellent move. He said that currently 1.1 million cubic metres were extracted daily or about 400 million annually, which is about 15-20 percent of domestic consumption.

"In the last few years we have launched several campaigns for hydrocarbon exploration and exploitation, all of them onshore. The northern Adriatic offers certain potential and I'm sure we will know how to use it in the future," the minister said.

Asked about the LNG terminal, Ćorić said that it was being built and that it would be operational at the end of 2020. He noted that the LNG terminal would help meet Croatian needs for gas and diversify supply routes for Europe. "The exploitation of hydrocarbons is one way of reducing Croatia's energy dependence, the other being the construction of alternative infrastructure," Ćorić said.

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ZAGREB, September 29, 2019 - An overhaul worth 800 million kuna was carried out in the Rijeka Oil Refinery in Urinj over the first four months of this year, the largest to date, and the installation of a 4 billion kuna delayed coker is being prepared, it was said at the Refinery Open Day on Saturday.

CEO Ivan Krešić said the event was organised to make the company as transparent as possible in its operations and relations with the local community.

The delayed coker, whose installation should be completed in three years' time, will increase profitability and enable the Rijeka refinery to rank with the most high-tech refineries in Europe as well as ensure its long-term viability, he added.

A contract on the installation should be signed by year's end.

More than 2,000 external contractors from dozens of domestic and international companies were hired for the overhaul, said Ivica Jerbić, the refinery's director.

Regular air and sea quality measurements around the refinery show the best results, except in the immediate vicinity, but the overhaul will significantly reduce hazardous particle emissions, he added.

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

ZAGREB, July 31, 2019 - The New York-based investment bank Lazard is the Croatian government's new consultant on the buyback of the Hungarian energy group MOL's stake in the INA oil company, Finance Minister Zdravko Marić told reporters in Zagreb on Wednesday after a meeting of the government's Advisory Committee on INA.

Marić recalled that a consortium of Morgan Stanley, Intesa Sanpaolo Group and Privredna Banka Zagreb had previously been selected as a consultant, but that disagreements had emerged over what should be included in the agency agreement, notably technical aspects of the hiring of consultants.

"We decided to conduct interviews with other bidders from the first round and we have selected a new consultant, Lazard," Marić said.

Environment and Energy Minister Tomislav Ćorić said that the decision on signing the agreement with Lazard would be formally adopted at a Cabinet meeting on Thursday.

Ćorić said that the new consultant's services could cost 9 million euro at most.

The agreement with Morgan Stanley, Intesa Sanpaolo Group and Privredna Banka Zagreb cost €8 million.

Ćorić said that due diligence could be completed in six months, and that the government would make its offer to MOL in the first quarter of 2020.

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ZAGREB, July 29, 2019 - Environment and Energy Minister Tomislav Ćorić said on Monday that information about a possible new government consultant for the buy-back of INA's shares from the Hungarian energy group MOL would be clearer after a meeting of the INA Advisory Committee on Wednesday.

Asked whether a new consultant would be selected in the process of buying back INA's shares, Ćorić said that the Advisory Committee was meeting on Wednesday and that after that the next steps would be known.

Last year the government selected the consortium of Morgan Stanley, Intesa Sanpaolo Group and Privredna Banka Zagreb (PBZ) to act as the government's investment advisor on the possible buy-back of INA's shares from MOL and the possible subsequent sale of those shares to a new strategic partner. The consortium's offer for this task was €8 million.

The Nova TV commercial television channel said on Sunday that the Advisory Committee would select a new consultant who would conduct a deep scan of INA and that the task could possibly be given to the Lazard firm.

Asked why the consortium failed to calculate INA's worth, Ćorić said that "disputes emerged regarding certain activities" and the task was not completed.

Ćorić asserted that it was realistic for the government to make an offer based on the results of the analysis and for the other side to then react to that bid. He added that a decision on the buy-back would only be known in the final phase.

"The buyer Croatia and the seller MOL have to agree on a price," he added.

In response to reporters' remarks that this could burden relations considering that the Hungarians wanted to be involved in the LNG Terminal on Krk island, Ćorić said that these were two separate matters. One refers to relations between Croatia and a private company whereas the matter of the LNG terminal refers to relations between the two countries.

"Croatia is interested in a partnership regarding the LNG terminal and not only with Hungary," he said, adding that Croatia wanted to retain a dominant role in the LNG terminal as its majority owner.

"We have a Hungarian bid to purchase 25% of the terminal. As far as we are concerned, negotiations on this matter are contingent primarily on the lease of the terminal's capacity," Ćorić said.

Asked whether the government was satisfied with the way INA was being managed, Ćorić said that the fact that the government wanted to buy back MOL's stake in INA spoke for itself.

In the meantime, communication has improved while in the future decisions regarding investments, primarily in the refinery business, are essential, he said.

More news about the INA-MOL issue can be found in the Business section.

ZAGREB, July 26, 2019 - In the first half of 2019, the INA oil group recorded a net profit of HRK 188 million excluding special items, which is 65 percent less than for the same period last year and a consequence of a lower refining margin environment, its financial statement showed on Friday.

The INA Group revenues totalled 9.79 billion kuna, up 3 percent compared to the first half of 2018. CCS (current cost of supplies) EBITDA dropped by 11 percent to 1.175 billion kuna.

Capital Investments (CAPEX) more than doubled compared to the same period last year and amounted to 1.183 billion kuna, mainly driven by refining investments.

Net gearing amounted to 14 percent, whilst net debt was at 1.763 billion kuna, reflecting a very strong balance sheet.

Investments in Croatia amounted to 992 million kuna, more than double compared to the same period last year.

"First half of 2019 was a period of intensive investment for INA. Total investments reached almost 1.2 billion kuna, majority of which was spent domestically. Refining capital expenditures more than tripled compared to the same period last year, to more than HRK 800 million, mainly related to the Rijeka Refinery turnover, one of the largest ones in the company’s history," Management Board president Sandro Fasimon said.

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