UPDATE 1-Croatia, MOL more upbeat on INA partnership after talks

Thu Jan 16, 2014 9:20am EST

* Talks held in more optimistic atmosphere

* Croatia still insists on corporate management accord

* MOL says ready to boost upstream investments in Croatia (Releads, adds details, Croatian minister statement)

By Igor Ilic and Krisztina Than

ZAGREB/BUDAPEST, Jan 16 (Reuters) - Croatia and Hungarian oil and gas company MOL took a first step towards a possible compromise over the future of jointly owned Croatian energy firm INA after wrangling over it for several years.

They had failed to make headway in two previous rounds of talks in Zagreb last year, but the two sides said Thursday's talks were held in a much more "constructive and optimistic spirit" and would soon continue.

Croatian Economy Minister Ivan Vrdoljak, who heads Zagreb's negotiating team, said, however, that the main bone of contention - corporate management of INA - had yet to be tackled.

"We welcome MOL's intention to increase its upstream investments in INA, and we are ready to talk about all the business issues, but also including the corporate management," Vrdoljak said.

He said the talks between the two biggest shareholders in the company would not be concluded until there was an agreement on corporate management.

INA produces oil and gas, including operations in Africa and the Middle East, runs two refineries and is Croatia's biggest utility.

MOL is INA's biggest shareholder with just under 50 percent, while the Croatian government has a nearly 45 percent stake and accuses MOL of acting as a majority owner. Croatia wants the right to influence major decisions.

MOL has refused to give up management control of INA and has said it would sell its stake to Croatia or a third party unless it secures an agreement that can lead to "value creation".

The Hungarian firm said the talks were based on a "rational attitude" and that it was ready to continue the talks "in an accelerated way".

MOL Chief Executive Jozsef Molnar, who headed its delegation in Zagreb, said the two sides had discussed an upstream development plan for INA.

"Today we were able to address the urgent need for relevant permits," Molnar said in a statement.

"According to our business plan, if we receive the relevant permits in time, INA will be able to produce an additional 4,300 barrels per day in the short term, which can be increased to 9,000 bbl/day in the mid-term," Molnar said.

A source close to MOL told Reuters on Thursday that for MOL, selling its INA stake remains an option until negotiations are settled successfully. (Reporting by Igor Ilic and Krisztina Than; editing by Zoran Radosavljevic and Jane Baird)