April 16, 2014 / 11:11 AM / 4 years ago

INA urges Croatia's government to halt forced gas sale

ZAGREB, April 16 (Reuters) - Croatian oil and gas firm INA urged the government on Wednesday to halt a forced sale of its gas reserves from the country’s storage facility, saying it would cause big losses and put jobs at risk.

Croatia in February 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 supply households.

As a result, INA has to free up its gas storage capacity for HEP by selling gas quickly to HEP and two other local firms.

INA, one of Croatia’s biggest employers with more than 13,000 staff, has said it could lose up to 350 million kuna from the sale.

“The loss of revenues will greatly impact the availability of funds for INA’s further investments in Croatia and threaten a considerable number of jobs. We don’t believe that either is in the government’s interest,” it said on Wednesday.

The first two sale rounds for the gas attracted no bids though the price was set at a 25 percent discount to the market price. INA said the price would fall further if the sale continued.

INA, co-owned by Hungary’s MOL and the Zagreb government, said it had contacted market regulators, participants and ministries to stop the sale but to no avail.

“We have exhausted all other options so we are publicly calling on the government to take steps to stop the forced sale, approve temporary gas storage capacities and allow us to sell the gas at realistic market prices.”

The government was not available for immediate comment.

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

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

MOL owns almost 50 percent of INA, while the Croatian government holds close to 45 percent. The two have been at odds over decision-making and investment policy in INA and began talks to resolve this last September.

Croatia says it does not have enough say in INA and accuses MOL of failing to fulfil its investment promises, notably in the oil 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.

Last year, INA suffered a net loss of 1.5 billion kuna ($268 million), compared to a 681 million kuna profit in 2012, largely due to devaluation of its Syrian assets, where it had to suspend operations on gas fields because of a civil war in that country.

$1 = 5.5117 Croatian Kunas Reporting by Zoran Radosavljevic. Editing by Jane Merriman

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