Hungary: INA refineries reduce MOL’s profitability says MOL CEO Molnar

, SEE Energy News

INA refinery capacities greatly exceed demand in Croatia and reduce the profitability of MOL’s refinery, said Jozsef Molnar, chief executive officer of the Hungarian oil and gas group MOL, which wants to retain its status as a strategic partner in INA.

“Before INA consolidation, the refineries of Hungarian MOL were among the three most profitable in Europe, since INA’s refineries have been associated to them, we can no longer claim that”, said among other things Wirtschaftsblatt Molnar, who is also a member of INA Supervisory Board in an interview for Austrian business daily.

Capacity of INA refineries is 6.5 million tons, while demand in the Croatian market is only 2.8 million tons, according to Molnar. “If we concentrate on producing a better location – and it is in Rijeka – capacity would still amounted to 4.5 million tons, so therefore it would exceeded the total demand in Croatia”, he added.

We need to concentrate the production and investment in the operationally more favorable location in order to be competitive,” he says. “If we want to compete on the international market, the following rules apply: who is not willing to go through that dictates the industry, loses the game. We cannot afford that”, says the head of MOL.
MOL attempts to improve “the process efficiency” in INA, according to him, resulted in negative campaign, “which probably have initiated the so-called business people affected by already initiated measures”.
Commenting on the negotiations with the Croatian government on resolving the dispute over management rights in INA, Molnar emphasized that the priority for MOL agreement, retention of the status of strategic partners and business continuity.
“And if we fail to reach an agreement, we will consider the selling. We have already set up data room, where there are more potential customers”, he added. “As before, we will consider all possibilities to resolve this situation, including the purchase of additional shares. If we can be a strategic investor in INA, we will be its competitor”, he says.

Commenting on the high Hungary dependence on Russian gas and efforts to reduce it, Molnar points out that MOL has invested 400 million dollars in the Hungarian-Croatian gas pipelines with a total capacity of six billion cubic meters. “But Croatia still has not allowed “reverse-flow” as promised”, he adds.
For this year Molnar announces MOL investment in the amount of 2.2 billion dollars, of which 60 percent in research and extraction segment, most in Kurdistan.

He confirms that Hungarian company has more billion dollars for acquisitions. “We study a number of options but none of them has advanced so much that we could publicly speak about it”.