Croatia revokes INA exploration licenses

Deals

Croatian oil and gas group INA Industrija Nafte's exploration licences in the Sava, Drava and Northwest Croatia region have been revoked by the Croatian government, daily Večernji List reported on Friday.

Hungary's MOL owns 47.46% of INA, the Croatia government has a 44.84% stake in the company.

The move, widely regarded as a renewed attempt by the Croatian government to squeeze MOL out of ownership, potentially strips INA of rights to about 80 million cubic meters of as yet unexplored gas, the daily said, citing industry experts who wished to remain anonymous.

The Croatian government said INA had not yet started exploration on 90% of these fields, while its license expires in March, 2012, the daily said.

Croatian industry insiders blamed MOL for the situation, saying the Hungarian company "has no interest in developing INA" until it gains full control of it, Index.hu quoted the daily as saying.

INA said the Ministry's decision will have a direct negative effect on its regular business operations as well as on investment plans.

The Croatian company released the following statement in response to the revocation:

"The revoked concessions were extended to December 31, 2015 (after expiration on December 31, 2010), under condition of beginning of the exploration works by March 31 2011, appointment of project managers, and reporting every six months to the Ministry.

In the last several years, when INA generated significant losses, focus of our activities was on the stabilisation of INA's financials and on those investment projects that were of great importance for both Croatia and INA's shareholders (refinery modernisation, finalising investments in Syria and on northern Adriatic) to put INA on a sustainable growth path.

Therefore, at the time INA was unable to allocate as much funds as it was intending to do into exploration activities in onshore Croatia.

Despite the challenging circumstances, INA pursued cross-border exploration activities and discovered oil and gas in several projects in Croatia in the last two years (Zalata-Dravica) while it also initiated sole risk exploration activities within onshore Croatia in 2010 (Selec 1) and already announced activities in those and other blocks for 2011 (drilling two exploration onshore wells and pursuing activities in NW Croatia and Dinaridi area).

In the meantime, significant efforts have been put into project preparation for Croatian onshore exploration activities and accordingly detailed workplans have been developed for those exploration areas.

INA will continue with intensified exploration activities in the next years on the concession it holds in Croatia (Istona Slavonija, SW Sava, Jadran, Dinaridi) and abroad (Syria, Egypt and Angola) as well."

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