ENERGY: Can Croatia’s Energy Strategy Adapt to Changing World Trends?

img_2631 October 2016, VG Intelligence Weekly Issue 28

The new Croatian Government was officially voted in last week on 19 October, and saw a country, mired by a tumultuous year on the political landscape, breathe a sigh of relief. The structure of the Government, a “strategic partnership” between the Croatian Democratic Union (HDZ) and the Bridge of Independent Lists (MOST), was negotiated over a month-long period. It saw HDZ leader and now Prime Minister (PM) Andrej Plenkovic and MOST leader and now Parliament (i.e. Sabor) President Bozo Petrov compromise on a number of issues, most notably on the energy sector. Petrov was keen to retain management of the state portfolio, while Plenkovic wanted management of the Economy Ministry. The deal they reached saw the creation of a “mega Ministry” for Environmental Protection and Energy under MOST Minister Slaven Dobrovic. The question on everyone’s mind is how will Minister Dobrovic, a renowned environmentalist and proponent of green projects, tackle some of the challenges facing the sector, especially in regards to strategic oil & gas state projects (e.g. LNG Krk, natural gas exploration, gas pipeline infrastructure development, etc.) The first challenge for Minister Dobrovic arose on 26 October when his party colleague and former Economy Minister Tomislav Panenic stated in the Sabor that there were plans to shut down the oil refinery in Sisak.  Namely, Croatia’s oil & gas company INA, jointly owned by Croatia and the Hungarian oil & gas group MOL, who has management control of the company, owns two refineries in the central town of Sisak and the northern Adriatic port of Rijeka. Croatia and MOL have been at odds over management rights for several years and are involved in two separate international arbitrations aimed at resolving their differences. Indeed, INA is one of the largest companies in Croatia, with over 11,000 employees. “It is in this Government’s interest to preserve INA, to continue the arbitration process with MOL and to insist that INA invests in research and processing here and abroad”, said PM Plenkovic, addressing the issue during the first Government Cabinet session on 27 October…

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