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INA Board Proposes $3.85 Billion in Development Investments

July 7 (Bloomberg) -- INA Industrija Nafte d.d., the energy company controlled by Hungary’s Mol Nyrt., proposed spending 20 billion kuna ($3.85 billion) on investments by 2015, two-thirds of which would stay in Croatia, a board member said.

Management is considering spending $1 billion on two refineries including the development of the Rijeka refinery on the Adriatic coast to European standards, Supervisory Board Vice Chairman Gyorgy Mosonyi said in a statement today. INA’s second refinery is in Sisak, 50 kilometers (31 miles) south of Zagreb.

Further developing the Sisak refinery would cost another $1 billion which “will never be a viable and profitable option,” he said, adding that the board proposed to “analyze alternative development scenarios to utilize Sisak in the future aiming to safeguard the jobs.” He firmly rejected that there were plans to close the Sisak refinery.

“Sisak is important for Croatia, for the local economy and for INA,” Mosonyi said. “It is one of INA’s strategic assets.”

Croatia’s largest refiner is controlled by Mol, which holds 47.47 percent of the stock. Croatian government owns 44.84 percent. Tensions between the two have risen since Croatia said it wants to review the contracts that have awarded management rights to the Hungarian refiner.

Davor Stern, the chairman of the supervisory board who represents the Croatian government, said in an interview today that closing Sisak would “never go through, as long as this board is in place.”

The management board will consult the strategy with representatives of major shareholders and should approve the mid-term strategy “as soon as possible,” Mosonyi said.

To contact the reporters responsible for this story: Jasmina Kuzmanovic in Zagreb at jkuzmanovic@bloomberg.net Zoltan Simon at zsimon@bloomberg.net

To contact the editor responsible for this story: James M. Gomez at jagomez@bloomberg.net

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