1-Croatia Plans to Modernize Rijeka Refinery
Croatian energy group INA plans to invest more than four billion Kuna ($616 million) to modernize its largest refinery but a second, smaller refinery will be converted into an industrial plant, it said.
The investment plan, approved by INA’s management board, is aimed at stemming losses in its refining division, currently running at around one billion Kuna a year.
INA owns two refineries in Croatia, one in the northern Adriatic port of Rijeka, and a smaller one in the central town of Sisak.
The plan foresees major investment in Rijeka to turn it into a top-level European refinery, INA said in a statement.
“Total investments are worth more than 4 billion Kuna, which would represent the single largest investment project in the history of the company,” it said.
“The final investment decision is planned for 2019, provided all preconditions assuring return on investment are met,” INA said. The modernized refinery should be ready to operate in 2023.
INA’s biggest shareholder is Hungary’s MOL which owns slightly below half, while the Croatian government controls close to 45 percent.
Under the investment plan, the Sisak refinery will be turned into another type of industrial facility.
The Sisak site would remain a major employer, but it was necessary to convert it from loss-making crude oil processing to “viable alternative industrial activities,” the statement said.
The new business in Sisak may include bio-component refining and petrochemical production, INA said, adding that it could also involve a modern logistics hub, bitumen, renewables and lubricant production.
Without giving details of possible job losses at Sisak, INA said it was prepared to offer alternative jobs to affected workers and severance payments significantly higher than the Croatian average.
Workers at Sisak have repeatedly voiced concerns in recent years about MOL’s alleged plans to shut down the plant, putting pressure on the Croatian government to prevent it.
The company estimated that, if fully implemented, its plans would increase average yearly core profit, or EBITDA, by more than one billion Kuna.
MOL and the Croatian government have been at odds for several years about management rights and investment policy at INA. Two years ago, the Zagreb government announced it intended to buy back INA shares from MOL, but little has happened since.
Croatian Prime Minister Andrej Plenkovic recently said that a final decision would depend on the price set by MOL.
In the first nine months of this year, INA’s revenues were 16.23 billion Kuna, 21 percent more than in the same period last year. EBITDA amounted to 2.7 billion Kuna, roughly the same as in the first nine months of 2017.
2-Bulgaria BEH Likely to Appeal EU Fine
State-owned Bulgarian Energy Holding (BEH) said it would very likely appeal the hefty fine the European Union antitrust regulators slapped on it for blocking rivals’ access to key gas infrastructure in Bulgaria between 2010 and 2015.
The European Commission fined BEH 77 million Euros ($88 million), saying the company abused its market dominance to hinder competition.
BEH’s gas supply unit, Bulgargaz, and its gas network operator, Bulgartransgaz, are also subject to the fine.
BEH and its units denied any wrongdoing and said they believed the access to the Balkan country gas network and its gas storage facility had always been granted in line with the law. They also said the imposed fine was disproportionate.
“The companies will carefully look at the decision and will probably appeal it by challenging both the allegations and the amount of the fine,” BEH said in a statement.
BEH said although the fine should be paid within three months, in the case of an appeal it can either make a provisional payment of the fine or provide collateral.
The Bulgarian government says the European Commission would have agreed to a settlement only if Sofia sold a majority stake in Bulgatransgaz to a European strategic investor as a guarantee that market would not be distorted.
Bulgaria, which still meets all of its gas needs through one route from one supplier — Russia’s Gazprom — says such an option is unacceptable, as its gas pipelines were strategic infrastructure. “On the final line of the negotiations we proposed all kinds of options that should guarantee transparency and control ... including selling a minority stake,” deputy Prime Minister Tomislav Donchev told ministers.