Monday, 29 July 2019

Possible New Consultants for INA?

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.

Friday, 26 July 2019

INA: Net Profit Down 65%

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.

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

Friday, 19 July 2019

INA Discovers New Gas Field in Northeast Croatia

ZAGREB, July 19, 2019 - The INA oil and gas company on Friday announced that it had registered the discovery of a new natural gas bed at the Drava-02 exploration site and that findings of exploration at the Severovci-1 gas well indicate a total of 53,000 cubic metres of gas a day.

INA registered the new well with the Croatian Hydrocarbon Agency (CHA), which was discovered in the vicinity of INA's exploitation fields in Molve, Kalinovac and Ferdinandovac in northeast Croatia.

The depth of the bore well is 3,410 metres and INA has conducted all these activities within the framework of approved programmes, INA said in a press release.

INA's Operating Director of Exploration and Production Tvrtko Perković said that he was pleased with the positive result at the Severovci-1 well because it confirms the quality, know-how and experience of INA's experts.

"Croatia is our most important area for exploration and production of oil and gas and our aim is to start production of all the existing capacities in the country. We are interested in further investing in exploration activities that could lead to discoveries and consequently production and that refers to smaller hydrocarbon basins too," Peković said.

More INA news can be found in the Business section.

Thursday, 30 May 2019

Hungary Wants to Resolve INA-MOL Relationship

ZAGREB, May 30, 2019 - Hungarian Foreign Minister Peter Szijjarto said on Thursday the relationship between the Croatian INA oil company and Hungary's MOL energy group burdened relations between the two countries which, beside this problem, cooperated well.

Every time we meet with Croatian government officials, INA is on the agenda, but we always let our Croatian friends know that is strictly a business issue, not a political issue being dealt with by the Hungarian government, Szijjarto told reporters outside the Croatian government after meeting with Prime Minister Andrej Plenković.

I must admit the relationship between MOL and INA or MOL and the Croatian state is a burden in our relations and we would like to get rid of this burden, but that's up to the two companies or to the company and the Croatian state. We can only keep our fingers crossed that they come to a solution, said Szijjarto.

Advancement of the relations with Croatia on the energy front is crucial for Hungary, he said. Energy security in this part of Europe is a critical issue. You see the relationship between Russia and Ukraine when it comes to the transit of gas, you see that Exxon and OMV still haven't decided on the exploitation of gas fields in Romania. That's why the LNG terminal in Croatia is one of the viable solutions for the diversification of energy sources. And since we realise that energy cooperation can't be separated from the MOL issue, we hope for a solution to this challenge, Szijjarto said.

He arrived in Zagreb to open a new Hungarian Embassy building, saying this was a clear signal of the importance Hungary attached to relations with Croatia. We are neighbours and our allied and strategic connection is obvious. We wish to advance and strengthen that relationship, which currently has certain shadows because of energy issues, but other than that, we cooperate as we should, Szijjarto said.

A press release from Plenković's office said the two officials concluded that Croatia-Hungary relations had been enhanced in recent months. Trade exceeds 2.2 billion euro and bilateral cooperation within the EU and NATO is very good, it added.

They underlined the importance of boosting economic cooperation, notably in energy, by taking into account supply security in all of central and eastern Europe. They also talked about the realisation of the LNG terminal project in Croatia.

Szijjarto extended Hungary's full support to Croatia for entering the Schengen Area, and both officials said they were happy with the status and rights of the Croatian minority in Hungary and the Hungarian minority in Croatia.

Opening a new Hungarian Embassy building in Zagreb on Thursday, Foreign Minister Peter Szijjarto said many had humiliated and looked down on the central European peoples who were the driver of the EU's development today, which was why it was important to additionally bolster the unity and cooperation between Hungary and Croatia.

We know that the EU, European culture, identity and security are faced with big challenges, which is why it's good to see from Hungary that in our southern neighbourhood lives a proud people that wants to preserve its identity and won't renounce its Christian values, Szijjarto said outside the embassy.

Many humiliated and looked down on us in central Europe, yet we have become the driver of the EU's development, and for that jump to happen it was necessary to understand that it's better to cooperate than disagree, he said, adding that Budapest considers Zagreb an ally, a friend and a good neighbour.

We also won't forget that in the midst of the biggest attacks in the European Parliament, the Croatian members from the HDZ's ranks stood by Hungary, which is why I'd like to thank Minister Pejčinović Burić and the Croatian government, said Szijjarto.

Last September, the EP adopted a report calling on the European Council to find that Hungary was endangering democratic freedoms and fundamental rights, thus gravely breaching the values on which the EU was founded. Five Croatian MEPs - Dubravka Šuica, Ivana Maletić, Željana Zovko, Marijana Petir and Ruža Tomašić - were among those who voted against the report.

Szijjarto said Hungarians appreciated Croats very much and loved Croatia, as evidenced by the 600,000 Hungarians who summered on the Croatian coast last year, bringing Croatia 400 million euro in revenue.

He recalled that Croatia was first in Hungary's foreign investments.

Pejčinović Burić said trade was constantly rising, from 2.1 billion euro in 2017 to 2.3 billion euro in 2018.

The two ministers said Croatia-Hungary cooperation was excellent with regard to ethnic minorities and in science, defence, and in culture, which will be seen next year, during Croatia's EU presidency, in a joint exhibition on the ties between the two peoples at the Budapest National Museum and Zagreb's Klovićevi Dvori gallery.

More news about relations between Croatia and Hungary can be found in the Politics section.

Wednesday, 1 May 2019

INA Increases Revenue and Profit

ZAGREB, May 1, 2019 - In Q1 2019, INA Group net sales revenues increased by 15% from the same period of last year to 4.25 billion kuna, while net profit excluding special items increased to 58 million kuna, the group said in a press release on Tuesday.

"The positive result was driven by the continuation of favourable hydrocarbon prices and increased sales," the group said.

EBITDA recorded a 12% increase to 539 million kuna, while net profits excluding special items grew to 58 million kuna, a much better result than in Q1 2018, when they totalled one million.

Capital investments in Q1 totalled 618 million kuna, much higher than in Q1 2018, when they totalled 96 million kuna.

Net gearing dropped to 6.6% with net debt at 838 million kuna.

Commenting on the results, INA Management Board President Sandor Fasimon said that after strong results in 2018 the group again achieved a very strong result in Q1.

"INA utilized the market conditions and increased both its sales and EBITDA, revenues growing by 15%, to the level of over 4 billion kuna in just one quarter. Upstream benefited from the stable hydrocarbon prices and production levels. Maturity of INA fields and the natural decline in gas production was offset by the continuous efforts in oil production increase. This was followed by the increase in investments, majority as before focused in Croatia, but also with a visible increase of spending in Egypt.

"Refining operations are marked with a major turnaround in Rijeka refinery, one of the biggest in recent years. This, together with the other investments projects in the company, brought the investment level to 618 million kuna, biggest level in Q1 since 2010."

This demonstrates INA's commitment to developing all business activities in a sustainable way, Fasimon said.

"Still, the deteriorated environment and the less favourable refining margins continue to burden the overall results of the segment expected to be mitigated in the future by INA DS New Course 2023 program. Despite the expected lower processing levels, caused by turnaround, INA managed to increase its sales and utilize the market opportunities both domestically and on the core markets, visible by 8% sales increase in Croatia and 23% in Bosnia & Hercegovina. Retail operations also recorded a visible growth of 7%, partly due to expansion of Montenegro network."

Overall, despite the Q1 2019 being very investment intensive, the company’s financial position stays strong and the low debt levels allow for stable operations and future investments, Fasimon says.

According to data in the report, Exploration and Production EBITDA excluding special items decreased by 18% to 569 million kuna while net sales revenues of the business grew by 3% to 969 million kuna.

Refining and Marketing revenues, including Consumer services and Retail, totalled 4.04 billion kuna, an increase of 15%. CCS EBITDA of Refining and Marketing including Consumer services and Retail excluding special items amounted to 14 million kuna as against a loss of 114 million kuna in the same period last year.

The result was achieved on the back of higher sales volumes in both wholesale and retail and strong sales margins, at a period of significantly lower processing due to a major turnaround in Rijeka Refinery, the company said.

Nonetheless, the loss from the core activity was 102 million kuna, according to the report.

More INA news can be found in the Business section.

Sunday, 17 March 2019

Croatia's INA Oil Company Expands Retail to Montenegro

ZAGREB, March 17, 2019 - Croatia's energy group INA, whose biggest shareholders are Hungary's MOL with just below 50 percent and the Croatian government with an almost 45 percent stake, has expanded its retail network in Montenegro by acquiring five new locations from petrol station chain Pavgord.

The locations include the capital Podgorica and the Adriatic city of Kotor.

INA will now operate 11 petrol stations in Montenegro, increasing its market share to 15 percent from just one percent in 2017.

The company says its medium-term goal is to become a major player in the Montenegro market.

The INA oil and gas company generated a net profit of 1.18 billion kuna in 2018, down 3.7% from 2017, its financial statement showed.

Total revenue increased by 19.5% to 23.35 billion kuna, while expenditure reached 21.83 billion kuna, up 21.5% on the year.

EBITDA rose by 3.0% to 3.49 billion kuna and net sales revenue increased by 20% to 22.35 billion kuna. Capital expenditure amounted to 1.82 billion kuna, an increase of 30% on the year.

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

Friday, 22 February 2019

INA Reports 3.7% Lower Net Profit in 2018

ZAGREB, February 22, 2019 - The INA oil and gas company generated a net profit of 1.18 billion kuna in 2018, down 3.7% from 2017, its financial statement showed on Thursday.

Total revenue increased by 19.5% to 23.35 billion kuna, while expenditure reached 21.83 billion kuna, up 21.5% on the year.

EBITDA rose by 3.0% to 3.49 billion kuna and net sales revenue increased by 20% to 22.35 billion kuna. Capital expenditure amounted to 1.82 billion kuna, an increase of 30% on the year.

The positive business results were driven by growth in all segments, particularly due to higher hydrocarbon prices and higher sales.

Sandor Fasimon, president of the management board, said that the INA Group had once again achieved a very strong result.

INA utilised the market conditions and increased both its sales and EBITDA, with revenues growing by a further 20% on the strong 2017 result to over 22 billion kuna. Upstream, as the main cash generator of the company, benefited from the increased Brent price, Fasimon said.

He warned that the natural decline of the production remains a challenge due to the maturity of company's upstream assets, adding, however, that multiple projects aimed at addressing this were underway.

He said that downstream operations remain burdened with the negative cash generation of refining operations, but that the increase in capital expenditure showed INA's commitment to maintaining a vertically integrated business model. The group's capital expenditure increased by 30%, mostly in refining.

As for retail operations, Fasimon said that the expansion of the network in Montenegro was evidence of INA’s future focus on regional markets.

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

Wednesday, 20 February 2019

Government Accused of Selling INA to Hungary

ZAGREB, February 20, 2019 - Social Democratic Party (SDP) members of parliament on Tuesday defended for more than four hours about 300 amendments they submitted to the INA Privatisation Act, dissatisfied with the fact that it is being discussed under fast-track procedure, telling MPs of the ruling HDZ party that the government was turning over INA to the Hungarian energy group MOL and betraying national interests.

"This law regulates the privatisation of Croatia's biggest company and requires a serious and comprehensive debate. But the government has changed its approach, organising a public consultation... during the Christmas holidays, and it did not even last for the full 30 days, after which the amendments were submitted to be discussed under fast-track procedure," said Social Democrat Peđa Grbin.

He said that the government's claim that the purpose of the bill was to align the law with EU rules was not true.

"The fact that the European Commission considers a law as not being in line with EU law does not mean that that is true. The EC is not the one to make decisions on whether laws are in line with EU law, that is what the EU Court of Justice does," said Grbin, criticising the government for not even trying to prove that the existing law was not in line with EU law.

"A normal country and a normal government should define the energy development strategy. Judging by the information at hand, we cannot see any ambitious energy strategy plan," SDP MP Sinisa Hajdaš Dončić said, expressing concern about the country's energy sovereignty.

Another SDP MP, Željko Jovanović, said that the HDZ's election slogan "Credibility" was totally missed, recalling that two governments had fallen over INA (both were HDZ-led governments, one led by Ivo Sanader and the other by Tihomir Orešković, a PM chosen by former HDZ leader Tomislav Karamarko), adding that he hoped the HDZ would lose the next election over INA again.

"If this government had a plan, the PM would not have just said, off the top of his head, on Christmas 2016, that 'INA will be restored to Croatian ownership'," SDP MP Sasa Đujić said, claiming that the government was betraying national interests.

Objecting that the amendments envisage two Croatian government representatives overseeing INA's operations while currently Croatia has three seats on the INA management board, MP Domagoj Hajduković wondered if the proposed amendments were a result of arrangements between Hungarian Prime Minister Viktor Orban and PM Plenković.

"The Croatian government's representatives will continue to sit on INA's management board as will two independent members," State Secretary for Energy Ivo Milatić said, rejecting the SDP's amendments.

In an ironic remark to a recent statement by President Kolinda Grabar-Kitarović, SDP MP Predrag Matić said that "the President has discovered that corruption in Croatia dates back to the times of the Habsburg monarchy, while the HDZ is making it possible for us to return there.

"In the 1990s we sold our banks to Austrians, we will now sell INA to Hungarians, and chances are we will again be living in the Habsburg monarchy," he said.

SDP MPs said they would insist on a vote on their amendments. "You don't have to accept the amendments. It is clear to everyone that they were submitted to point to a problem. Accept our proposed conclusion and let us have a second reading on the bill," said Grbin.

The INA Privatisation Act, which went into force in 2002, defines the company's privatisation. The current bill of amendments changes Article 10 under which Croatia has the exclusive right of control over changes in the company's ownership structure as well as the right to veto certain decisions of the company's management and the right of pre-emptive buying of the entire company or parts thereof at an estimated market price in case the process of its liquidation is launched.

Under the bill, a party acquiring INA shares and wishing to own an interest of more than 50% should inform the relevant minister about this and submit to the minister a long-term business management plan.

Based on the minister's opinion, the government makes a decision on its consent for the acquisition of shares within a 30-day period.

The government can withhold or withdraw its consent if it decides that it constitutes a serious threat to public security and puts the country at serious risk of losing secure, reliable and regular energy supply.

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

Monday, 18 February 2019

Sanader’s INA-MOL Corruption Trial Resumes

ZAGREB, February 18, 2019 - A Zagreb County Court panel on Monday dismissed a motion for their recusal filed by the defence of former prime minister Ivo Sanader in the INA-MOL corruption trial, in which the other defendant is Zsolt Hernadi, CEO of the Hungarian energy company MOL, who is beyond the reach of the Croatian authorities.

Panel president Maja Štampar Stipić also dismissed a motion to postpone today's hearing, filed by Sanader's new court-appointed attorney Nikola Drobac. Instead of three months he had requested to familiarise himself with the case, he was given one month.

The panel found that with their motions, the defence was trying to stall the trial.

Judge Stampar Stipic adjourned the previous hearing on February 8 because Sanader's counsel had not shown up and chose a lawyer for him, which Sanader called a gross violation of his constitutional rights and fundamental freedoms. Today he again claimed that the court's choosing a lawyer for him violated his minimum rights to a defence.

In the INA-MOL case, Sanader was already convicted to 10 years in prison for taking a bribe from Hernadi, but the Supreme Court reduced the sentence to 8.5 years. The ruling was eventually quashed by the Constitutional Court.

The USKOK anti-corruption office accused Sanader of giving controlling rights in Croatian energy company INA to MOL for EUR 10 million and of arranging with Hernadi the divesting of INA's unprofitable gas business.

Former INA supervisory board chair Davor Štern testified in court on Monday that the energy company's management was "only formal" and that its Hungarian peer MOL made all the decisions without seeing to INA's interests.

"INA's management was only formal because all decisions were made by the board of executive directors, and one could also hear that closing down the Sisak refinery was widely discussed already in the 2009 contract amendments. MOL had 44% ownership and practically made every decision, without seeing to INA's interests," said Stern.

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

Wednesday, 13 February 2019

Do Proposed Amendments to INA Law Favour MOL?

ZAGREB, February 13 2019 - The chairman of the ruling Croatian Democratic Union's (HDZ) parliamentary group, Branko Bačić, on Wednesday dismissed the opposition's claims that the proposed amendments to the INA Privatisation Act favoured the Hungarian energy group MOL to facilitate INA's privatisation, stressing that the purpose of the proposed amendments was to further protect national interests in the Croatian oil and gas company.

"There is not a single provision in this bill that reduces the influence and importance of government representatives and members of INA's bodies. On the contrary, their influence and importance is strengthened. This position has been brought into accord with the EU's acquis communautaire, which means that after the adoption of the bill there will be no reason any more for the European Commission to ask Croatia to change its actions in INA's bodies," Bačić said in response to questions from the press after a meeting of the HDZ group.

Bačić said that the proposed bill of amendments would ensure full protection of Croatia's interests in INA with regard to oil supply and its relationship with the strategic partner. He noted that the proposed amendments did not give MOL any new position that could lead to changes in the relationship between the government and the strategic partner.

Asked why this bill was being considered under fast-track procedure, Bačić said that the bill had been talked about in public for years, that countless debates had been held in parliament and government meetings, and that all issues in that regard had been discussed.

Asked if the HDZ had the support of all coalition partners for amending the INA Privatisation Act, Bačić replied in the affirmative.

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

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