Ortutay: Despite market volatility, we are committed to implementing our strategic investments

Investments, supply security, and the development of all business activities while maintaining financial stability will be the main determinants of Ina’s operations in 2024, in a similar way to how they characterized the outgoing year. In the recent period, the macroeconomic environment has normalized, so it is already possible to assume that 2024 will not be a year of excitement like previous ones.

However, this does not mean that global uncertainty has disappeared, and markets remain unpredictable. This makes Ina’s strategy to prioritize the preservation of financial stability and further movement towards building a long-term sustainable business through the implementation of strategic investments even more important. At the end of 2023, lower profitability is expected compared to historically strong levels in 2022, influenced by market regulation.

Despite market volatility and uncertainty, Ina is committed to implementing its strategic investments. The most important is certainly the ‘Project for the Upgrade of the Rijeka Oil Refinery’, worth 630 million euros. It will strengthen the security of supply for the Croatian market and the region with petroleum products, which will primarily be reflected in increased production of diesel fuel. This is the largest single investment in Ina’s history and the largest current industrial investment in Croatia. The project has exceeded 80 percent overall completion, more than 1,000 workers are employed at the construction site, and our unchanged goal and effort is to start production in the new refinery facilities by the end of 2024.

By implementing this important investment with a strong impact on economic trends, strengthening the security of supply for domestic and regional markets, and ensuring the long-term sustainability of refinery operations, Ina has demonstrated all the essential characteristics of its business approach in this project. We are also proud that during the earlier planned multi-month downtime of the refinery at the beginning of this year – due to necessary work on old facilities as part of the modernization project – supply continued uninterrupted, and no one lacked even a drop of fuel, primarily thanks to the excellent preparation of our workers. Although some doubted us at that time, it proved to be unjustified.

Important steps forward this year

In addition to continuing the modernization of the refinery, 2023 also marked Ina’s important business breakthrough in the Slovenian market. Ina and Mol completed the acquisition of OMV Slovenia, and now together manage a network of more than 130 gas stations in that country. Ina increased its previous stake in OMV Slovenia from 7.75 percent to 33 percent in the new company Mol & Ina. Ina’s recognizable exterior will adorn 27 new gas stations, and the first location has been renovated in recent days. It is also important to know that the Rijeka Oil Refinery will be the first choice for supplying all Slovenian gas stations owned by the Mol Group.

Another significant business breakthrough for our company this year was the launch of commercial electricity production from renewable sources. At our location in Virje, we have put into operation the second largest solar power plant in Croatia. Along with its second solar power plant in Sisak, Ina will supply approximately 16,000 MWh of electricity from renewable sources to the energy grid annually.

In Sisak, we are exploring the possibilities of implementing other renewable energy production projects, such as biogas production from agricultural waste, which is currently proving to be a realistic option. When we talk about industry transformation and renewable sources, by obtaining permits for exploratory activities in two geothermal exploration areas in Croatia, Leščan and Međimurje 5, we have also opened the possibility of potential geothermal energy utilization, where we can leverage the extensive existing knowledge we have in our traditional oil and gas exploration activities. A stronger push for Croatia in geothermal energy is also an opportunity for our service company Crosco, which possesses the technology and experience needed for drilling the required wells.

We are also achieving successes in traditional operations. Near Grubišno Polje, we discovered a new large gas field that, if it were in production today, would contribute as much as seven percent of Ina’s total gas production. To make this happen as soon as possible, we see progress in accelerating the process of issuing all necessary permits for the construction of the production system. We have also been successful abroad: Ina participated for the first time in gas production in Egypt, where, in cooperation with partners, a gas well was put into production in the East Damanhur block in the Nile delta.

Retail digitalization

Our drilling campaign in the northern Adriatic will be monetized later for several reasons. The quantities have proven to be smaller than expected, which is not unusual in this business. At the same time, the construction industry at the international level is overheated, resulting in a lack of contractor capacity and high prices. Despite this, we remain committed to bringing promising wells into production.

We are also investing in our third key business activity, customer services and retail, which is undergoing a strong transformation and digitalization. Demand for fuels was strong during 2023, aided by a successful tourist season. We continuously expand our offerings and services and introduce the gastro concept Fresh Corner at more and more locations. Our customers recognize and choose us on their travels, and we feel this in the growing non-fuel margin. In 2023, we enabled retail customers to access a new enhanced fuel formula, Class Plus Expert. At the same time, INA Loyalty reached over 570,000 members, making it one of the most popular loyalty programs in Croatia.

In the coming year, Ina will maintain its key role as a pillar of the Croatian economy and a guarantor of supply security. We will continue the initiated investments, especially smart and sustainable ones. In 2024, we hope for a stable and predictable regulatory and tax environment as it contributes to a healthy investment climate.