Hungary, Croatia: MOL-INA arbitration may end favorable for Croatia claim from Gov

, SEE Energy News

Minister of Economy Tomislav Panenić (MOST) commented that oil company INA arbitration that is conducted between the Croatian and Hungarian MOL on management rights in INA according to UNCITRAL rules and stated that it is of national interest which all must support and believes that the arbitration shall end favorably for Croatia.

Regarding Ina arbitration, Minister assessed that it is launched for justified reasons and that the facts on Croatian side are undisputed. He also stated that those who doubt the arbitration and publicly communicate it cause severe damage to Croatia.

The dispute has its roots in the INA Privatization Act passed by the Croatian Parliament in 2002 permitting MOL to acquire 25%+1 share of INA. The Act was aimed at opening the economy and reducing the Croatian state’s share in INA as part of the policy package recommended by the IMF to facilitate Croatia’s accession to the European Union.

Tensions began shortly after MOL gained control of INA through its acquisition of 47.16% of INA’s shares on the Zagreb Stock Exchange in October 2008, leaving the Croatian Government with 44.84%. MOL’s right of control was formalized in the First Amendment to the Shareholders Agreement negotiated by MOL and Croatian Government representatives at the end of 2008 and approved in January 2009. It was also approved by the Croatian Competition Agency and the European Commission and came into effect in June 2009. In 2010, MOL further increased its ownership to 49.1% by purchasing shares from minority shareholders.

MOL’s gain of effective control of INA was not well received by the Croatian Government and the relationship between the shareholders has been in steady deterioration.

Currently, there are two international arbitrations in play, one relating to the the control of management rights, and the other to the future INA’s two refineries in Rijeka and Sisak, the latter posing a major challenge to the Milanovic’s Government in this election year.

Croatia says that MOL has failed to make appropriate investment into INA and in particular, to modernise the Sisak and Rijeka refineries. MOL retorts that it has invested in INA’s refineries as much as it would cost to create new ones, transmits