US and Russia compete for Croatian gas, while Poles plot in the background

16.01.2015 | By Bartłomiej Sawicki

Winston Churchill once said that the Balkans were “the soft underbelly” of Europe. Today, all eyes are focused on the events on the eastern border of Ukraine. Meanwhile, the game for Europe’s energy future is taking place in the Balkans. The Russians lost the battle for the South Stream gas pipeline with the European Union. However, Moscow didn’t give up and through Gazprom got interested in the acquisition of shares of the Croatian oil and gas company INA. This prompted Washington to take preventative steps against the Kremlin strategy. The background of this geopolitical struggle is filled with a recent wiretapping scandal in Poland.

INA is the biggest energy company in Croatia and its two major shareholders are the Hungarian MOL with 49% and the Croatian government with 44%. Over the last 4 years the two partners have been in dispute over the company’s management and development.MOL is said to want to sell its shares and Russians are very interested. Last June, during a meeting in Zagreb, Gazprom’s CEO Aleksiej Miller talked about cooperating in the energy sector with Croatia’s Prime Minister Zoran Milanović and the Minister of Economy Ivan Vrdoljak. They also discussed INA’s future and the Russians expressed their interest in the ongoing tender for oil and gas exploration licenses on the Adriatic Sea. This event gives a hint on why Russians were so curious about INA. The Croatian mogul exploits the national oil and gas deposits. Croatia covers 60% of its gas consumption with its own resources. This is one of the best ratios in this part of Europe. In addition, Zagreb is potentially in possession of a large hydrocarbon deposit in the Adriatic Sea and INA is one of the 4 companies that took part in the recent tender. According to the government, within the next 5 years Croatia will be able to extract even 9 billion m3 of hydrocarbons. Add to that the emerging energy hub and you have a country that can threaten Russian interests in Southern Europe. By taking over INA, Moscow could prevent this scenario.

To make sure this does not happen, the USA offered to mediate between the Croatian government and MOL to find a compromise solution on how to manage the company. Both parties agreed to this, but so far the negotiations have been futile. Another player who can challenge Gazprom’s plans is the Swiss-based industrial company – the Klesch Group, which has units producing and trading oils, metals and chemicals. Bloomberg Agency said that Klesch Group, owned by US billionaire Gary Klesch, wanted to buy MOL’s 49.1% stake in INA.

However, details of Klesch’s proposal remain unknown. Last weekend “Jutarnji List” broke the news that the Polish oil company PKN Orlen was allegedly interested in MOL’s shares. Orlen was to offer 1.5 billion Euro for the 49%, while the Hungarians demanded twice as much. The Polish company denied this, but this revelation is actually not new. Last June the “Wprost” weekly revealed recordings of private conversations between members of the Polish establishment. One of the tapes included a discussion between Orlen CEO Jacek Krawiec and Włodzimierz Karpiński, the Minister of the Treasury where Krawiec confessed that his company could not afford to buy all of INA’s shares.

Picture: INA

About Author

Bartłomiej Sawicki

Graduated in history at the Pedagogical University of Cracow and international relations at the Jagiellonian University. Postgraduate studies at the University of Mining and Metallurgy in Cracow - Oil and Gas Management. Postgraduate studies at the Tischner European University in Krakow – Multimedia, journalism, social networking. Journalist for the information web portal about shale gas- gazł Member of the expert team on European Union at the Jagiellonian Club. Research interests: energy security, former Yugoslavian countries.