Conquering the markets of southeastern Europe is a big strategic goal for INA and MOL. INA was the dominant oil company in the former Yugoslavia and seeks to recapture this position. With Austria’s OMV establishing a leading position in the Romanian market, conquering the former Yugoslav markets is more important to INA-MOL as regional consolidation in the oil industry continues.
The region has attractive growth prospects, with GDP growing much faster than in the EU and a ratio of cars to population less than half the EU’s. This indicates long-term potential as car numbers converge towards the European average.
“INA cannot remain a company exclusively within Croatia’s borders,” says Croatian vice-president Damir Polancec. “Therefore I give my full support to INA’s efforts to expand and it is natural that the major chance for that is on the markets of the former Yugoslavia. The major investment in the refineries will certainly enhance the quality of finished products and give INA a situation where it has a comparative advantage vis-à-vis other companies in the area of former Yugoslavia.”
Neighbouring Bosnia Herzegovina (BiH) has no significant refining capacity and is therefore dependent on imports of oil derivatives. INA already provides more than 50% of BiH’s needs and owns 36 filling stations in the country.
BiH’s largest retailer is Energopetrol, with 65 filling stations and a 15% market share. However, it is heavily laden with debts and is loss-making.
In April an INA-MOL consortium made the highest bid for 67% of Energopetrol’s shares, beating OMV and a Bosnian bidder. The winning package was worth €112 million, including €77 million for investment in the company and €31 million to take on Energopetrol’s debts.
However, since starting talks with the government of BiH’s Federation (the mainly Muslim-Croat part of Bosnia), the winning consortium has had nothing but troubles. First, the government “found” an extra A10 million of Energopetrol debts owed to the government itself that were not included in the tender documentation and insisted that INA-MOL also pay this, which the consortium refused to do.
Secondly, some ministers have objected to INA’s presence in the consortium, citing alleged unpaid debts, which are subject to a court case. Despite almost daily rumours that the tender is about to be cancelled or that Energopetrol is on the verge of bankruptcy, the dispute rumbles on.
In terms of population, Serbia is former Yugoslavia’s biggest market, double the size of Croatia.
At the end of the 1980s, INA owned 194 petrol stations and other property in Serbia. However, in 1990 the Milosevic regime confiscated this property and formed from it Beopetrol, which covers 20% of the Serbian market. Despite a lawsuit from INA to recover its property, Beopetrol was privatized in 2003. The successful bidder was Russia’s LUKoil, with a bid valued at €207 million for a 79.5% stake. MOL, which offered €187 million, was beaten into second place. MOL has since set up an office in Serbia to try to build its own retail network in the country.
Serbia’s main oil company is NIS, which owns two refineries at Pancevo and Novi Sad and 500 petrol stations. The Serbian government has also invited bids for a financial adviser as a first step in the company’s privatization. MOL is expected to be a bidder but analysts regard LUKoil as the probable winner, building on its Beopetrol acquisition.
