INA Warns of Losses Over Forced Gas Sale

Croatian oil and gas company INA said its gas trading arm could lose up to 350 million kuna ($63.7 million) due to a forced sale of its reserves in the Croatian gas storage facility.
 

In February, the government named state-owned power board HEP to replace INA's gas trading company, Prirodni Plin, as the gas supplier to local firms and municipalities, which then sell gas to households. This obliges INA to free its storage capacity for HEP.

"Prirodni Plin has a bit over 200 million cubic metres of gas in the Okoli storage facility left, which is almost 40 percent of Okoli's overall capacity," INA said in a statement on Friday.

It said it had asked the government to allow it to sell the stored gas gradually until the end of July but was rejected.

"We think this is not fair and is damaging for the company. Such decisions destroy the value of the company by putting INA in an unfavourable market position against competitors," INA said.

The government said its decision to replace INA with HEP was prompted by the fact that Prirodni Plin had been losing money, which the government said had put future deliveries at risk.

Prirodni Plin has been piling up losses for years because of regulated household gas prices. Croatia, which joined the EU last July, wants to keep regulated prices for households for another three years.

"The sale of gas from Okoli will have four rounds, and in the last round the price could be merely 25 percent of the starting price. Such a sale would inflict losses for Prirodni Plin worth 350 million kuna," INA said.

Hungary's MOL owns almost 50 percent of INA, while the Croatian government holds close to 45 percent.

The two have been at odds in recent years over decision-making and investment policy. Croatia complains it does not have enough say in INA and accuses MOL of failing to fulfill its investment promises, notably in the refinery business.

MOL says that Croatia's bureaucracy is hampering its investments and that the government failed to take over INA's loss-making gas trading unit, as promised in a shareholders agreement signed in 2009.

($1 = 5.4960 Croatian Kunas)

(Reporting by Igor Ilic; editing by Zoran Radosavljevic and Jane Baird)