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Rosneft eyeing MOL stake in INA

Russiaʼs state-owned oil and gas company Rosneft could take MOLʼs place as a stakeholder in Croatian peer INA if Croatiaʼs government seeks a new strategic partner, Rosneft CEO Igor Sechin was quoted as saying in an interview Saturday. Meanwhile, a Swiss court rejected the Croatian governmentʼs request for revocation of an earlier arbitration ruling relating to INA.

"Weʼre interested in efficient investments in the region," Sechin told Croatian daily Jutarnji List, cited by Hungarian news wire MTI. He added that Rosneft sees INAʼs refineries in Sisak and Rijeka as "two integral elements" of the company. 

Sechin acknowledged MOLʼs stand on profitability and headcount at the Sisak refinery, but said an upgrade at the facility could put it in an important position on Europeʼs oil refinery market.

"If Rosneft becomes an INA owner, it will modernize the companyʼs operations and it will be able to operate profitably under market conditions," he claimed. The refineries enjoy an advantage from the logistics angle in the Mediterranean region, he added.

MOL owns just under half of INA, but has management rights in the company. The government of Croatia is the other big shareholder, holding a 44.84% stake. Both owners have been at odds for years over the companyʼs strategy, including the fate of the Sisak refinery.

Croatian appeal rejected

In related news last Friday, the Federal Supreme Court of Switzerland rejected the Croatian governmentʼs request for the revocation of an earlier arbitration ruling by the United Nations Commission on International Trade Law (UNCITRAL), whereby Croatia lost its case against MOL regarding the management of INA.

The court also ordered the Croatian government to pay CHF 200,000 in court costs and a further CHF 250,000 to cover MOLʼs legal fees. 

In December, UNCITRAL dismissed the Croatian governmentʼs claims against MOL relating to bribery, corporate governance and alleged breaches of a shareholdersʼ agreement. The government appealed the decision in February. 

MOL and the Croatian government, as the biggest stakeholders in INA, have constantly disagreed over the companyʼs strategy. Croatian Prime Minister Andrej Plenković said late last year that the government would buy out MOLʼs stake in INA.

A separate arbitration process between Croatia and MOL, launched by the Hungarian company in November 2013, is still ongoing at the International Center for Settlement of Investment Disputes (ICSID) in Washington, D.C., according to reports.

MOL contends that the Croatian government failed to fulfill its obligations under the 2009 Gas Business Master Agreement, according to a summary on Croatian central government portal vlada.gov.hr. Under the agreement, the Croatian government undertook to take over from INA the storage and sale of gas supplies and buy the entire domestic gas output from INA at market price in the next 15 years. MOL claims Croatiaʼs non-compliance with that provision caused it damages of approx. EUR 263 million.

After MOL launched arbitration proceedings with ICSID, the Croatian government launched its own arbitration proceedings against MOL with UNCITRAL on 17 January 2014, asking for the annulment of amendments to the 2009 shareholdersʼ agreement which gave MOL control over INA and the Gas Business Master Agreement, recalled the Croatian government news portal.