Croatia Seeks Talks Regarding INA, MOL Partnership

Croatia hopes to continue talks with Hungary's oil and gas group MOL over their troubled partnership in Croatia's energy firm INA in September, Economy Minister Ivan Vrdoljak said on Monday.

He was speaking to state television from Paris where he was attending the start of an international arbitration procedure at which Croatia is trying to annul the current shareholder agreement between Zagreb and MOL. The procedure began before the International Chamber of Commerce.

"I am not allowed to talk about the details of the arbitration procedure, but I can say we have reasons to be optimists," Vrdoljak said.

MOL is INA's biggest shareholder with just under 50 percent, while the Croatian government holds nearly 45 percent.

In June, Croatia's Supreme Court confirmed a guilty verdict against ex-prime minister Ivo Sanader for taking a bribe from MOL in exchange for allowing it a dominant position in INA. Sanader and MOL denied the charges.

The ruling did not automatically annul a disputed INA shareholder agreement that Zagreb and MOL reached in 2009, but serves as a basis for Croatia to try to render it null and void in a separate procedure.

"I want to talk to MOL. I would prefer an agreement than an arbitration. We will invite our colleagues from MOL for a new round of talks in September. If there is no agreement (with MOL), the arbitration will bring a ruling," said Vrdoljak, who is also Croatia's chief negotiator in talks with MOL.

Croatia and MOL have been at odds over management rights and investment policy. MOL has said it was prepared to sell its stake in INA if no agreement on the future partnership with Zagreb was reached relatively soon.

The talks started almost a year ago, but five rounds held so far have yielded no progress.

Croatia insists that the management rights in INA be redefined so the government has an equal say in strategic decision-making. MOL has refused to give up management control.

The Croatian government says MOL has failed to invest enough in INA's development and modernisation since it became a shareholder 11 years ago.

MOL has complained that Croatia is slow in issuing licenses for investment projects and cites Zagreb's failure to take over INA's gas trading business, as agreed in 2008, which inflicted major losses on INA due to caps on gas prices.

MOL is pursuing a separate international arbitration procedure saying it wants to protect its investments in INA.

Reporting by Igor Ilic