PM: Negotiations with MOL on INA after arbitration finalised

Prime Minister Tihomir Oreskovic on Wednesday said that the government would wait for the arbitration over the INA oil company to be completed, which is expected to be in the autumn, and that after that negotiations with Hungary's MOL would be continued.

Oreskovic made the statement during Question Time in parliament while answering a question from Croatian People's Party (HNS) MP and former economy minister Ivan Vrdoljak who asked when the government planned to present its negotiating position and who would be conducting the negotiations.

Vrdoljak said that the situation in INA was disastrous as no investments were being made in the Rijeka refinery, that this year's business plans again mention the shutting down of the Sisak refinery and that "MOL wishes to transform INA into its subsidiary and a network of petrol stations without any prospect of investment."

Oreskovic said that it was clear to everyone that INA was a company of national importance and that the government would do everything to protect national interests.

"We all know that the arbitration is underway and this government's stance is that we will wait and see what the result of the arbitration will be. I think that it will be completed in the autumn and then we will see what the results are," he said.

He underscored that stability in INA was essential, which is why the government had extended the term of the current management board for a year.

He described relations with MOL as very complicated. "A government team is analysing possible scenarios that would be in Croatia's best interest. We will sit down with MOL when the time is right and start negotiations," he said.

Responding to Oreskovic's statement, Vrdoljak said that the government should not wait until the autumn but instead react immediately to the fact that INA refineries were not being upgraded.

"Arbitration is a long process. It was MOL that insisted on the arbitration, not us. I would be happiest if both arbitration proceedings were cancelled and an agreement is reached on investments in the Rijeka and Sisak refineries so as to prevent INA from turning into a MOL subsidiary," Vrdoljak said.

In November 2013, MOL filed for international arbitration against the Croatian government at the International Centre for Settlement of Investment Disputes (ICSID), citing violation of certain obligations and proceedings regarding its investments in Croatia. MOL believes that the Croatian government failed to fulfil its obligations from an agreement on gas business and its annexes, which it undertook to fulfil in early 2009. At the time, the government undertook to take over the business of gas storage and sale from  INAand to purchase all of INA's domestically produced gas at market prices over a period of 15 years.

MOL claims that it had suffered a loss of at least two billion kuna because of the government's non-compliance with those commitments.

In January 2014 Croatia filed a counter-suit at the United Nations Commission on International Trade Law (UNCITRAL) in Geneva, seeking that amendments to the agreement between the two oil companies signed in 2009 concerning management rights in INA and the gas business be revoked. Croatia is also seeking compensation for damage resulting from those agreements that were signed during former prime minister Ivo Sanader's term in office.

Sanader has since been tried for this case and is currently in prison.

MOL owns 49.08% of the shares in INA and the Croatian government holds 44.84% of the shares.

Last update: Tue, 28/06/2016 - 17:51

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