Croatian government mandates all gas sales to state power company and orders 10% increase in gas production

The decision was made over the head of Hungary’s MOL, which has management rights in Croatia’s largest gas company

editor: REMIX NEWS
author: Index
Compound pressure booster station for Croatian gas and oil company INA. (ganzair.hu)

The Croatian government on Wednesday mandated oil company INA to sell all the gas produced in Croatia to the exclusively state-owned Croatian Electric Works (HEP); it must also increase its production by 10 percent, Croatian public television reported.

Croatia’s Economy and Energy Minister Davor Filipović said after the government meeting on Tuesday that, following discussions with the crisis team responsible for the security of gas supply, a unanimous decision was made to recommend to the government a 10 percent increase in production, as well as the exclusive sale of all extracted gas to HEP.

State-owned electric utilities transmit and sell this gas to households, hospitals, kindergartens, and other institutions. The measure will enter into force on Oct. 1 and will be in effect until the end of March next year. Pursuant to the government decree, the natural gas producer must sell natural gas at a fraction of market prices for 0.3425 kuna (€0.0455) per kilowatt hour (kWh). The gas is owned exclusively by HEP and is made available to the gas supply companies in order to settle losses.

The gas sold to HEP is primarily needed to mitigate the possible effects of gas supply disruptions.

According to the justification, the amount of gas needed for the uninterrupted operation of the gas providers (about 18 million cubic meters) is a big problem, made worse by the additional needs of 122,560 residential customers, whose supply is not ensured as of now.

At a press conference following the government meeting, the economy minister announced that he will notify Hungarian oil and gas company MOL, the majority owner of INA, of the government decree — MOL owns 49.08 percent of the Croatian company, and the Hungarian oil company also has management rights in the company; the Croatian state owns 44.84 percent of the company. As Filipović said, MOL received an advance warning last week that Zagreb would make such a decision in order to protect Croatian households.

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