INA awaits strategic partner

Zagreb – Croatia’s oil group INA expects its new strategic partner, due to be chosen soon, to back its plan to invest $1.6 billion in upstream projects and upgrading its two aged refineries over the next five years. Chief Executive Tomislav Dragicevic also told Reuters in an interview yesterday that Croatia’s largest company planned to cut its 16,000 work force gradually in the coming years and target smaller retail firms in the region for takeover. «We shall discuss our strategic plan with all three bidders, but I do not expect big changes, perhaps a slightly different timetable, or other small alterations,» Dragicevic said. «This plan ensures our economic growth in midterm, with or without strategic partners,» he added. He said all three suitors that submitted binding offers for a 25 percent stake in January – Austria’s OMV, Hungary’s MOL and Rosneft of Russia – were pleased that INA had kept its drilling, refining and retail segments. The government is due to hold talks with the three bidders in the coming weeks and sign an agreement with the winner by the end of March. Having suitors from the region — OMV and MOL – was a mixed blessing, Dragicevic said. «If one of them becomes our partner, the other becomes a regional rival. Rosneft is remote and cannot be a threat and if the shareholders’ agreement is properly done, it will not be able to have a crucial say in INA’s business policy.» Accepting INA’s strategic plan could be decisive to the bids, along with the price offered, which state officials have put at $300-400 million without revealing other details. INA’s 2002 net profit rose to 800 million kuna ($113.2 million) from 700 million the previous year, on 14 billion kuna in revenues, compared to 15 billion in 2001. After several years of losses, INA reverted to profit in 2001 – after the government liberalized oil prices – and underwent a major restructuring. But its privatization has failed to attract major Western oil firms. «Western oil giants, which have not been very active in oil privatization in the region so far, are waiting for further consolidation of the sector,» said Dragicevic, adding that INA now probably ranked as the fourth major central European oil firm, along with OMV, MOL and Poland’s PKN Orlen. Dragicevic said INA did not want «to give up our downstream operations. It is our most vital segment, and one that helps oil companies survive troubles in our business with more ease.» He said INA already had licenses to drill for gas in Egypt and in Syria, where last year it found considerable reserves at four drilling sites. Russia, Azerbaijan and Libya were also on the agenda, he added. INA plans to invest $1.1 billion in upstream schemes, around $370 million in refineries and $100 million in retail, where it already has an established presence in the former Yugoslav markets of Bosnia and Yugoslavia. Dragicevic said INA was also on the lookout for possible acquisitions. «I think we shall aim for the retail sector, either a private company or a retail chain, to increase our sales capacity.»