By Krisztina Than
BUDAPEST (Reuters) - Hungary may take legal action against Croatia in a long-running dispute over oil and gas group MOL's investment in Croatian peer INA, the Hungarian government said on Wednesday after Croatia issued an arrest warrant for MOL's chief executive.
Prime Minister Viktor Orban's government, the largest single shareholder in MOL, said it would ask MOL's management to consider selling its near-50 percent stake in INA to the Croatian government or a third party, after what it said were "unacceptable" steps taken by Zagreb against MOL.
Croatia has issued an Interpol and European arrest warrant for MOL chief Zsolt Hernadi in a bribery case, Croatian police confirmed to Reuters. MOL has denied all the accusations.
Relations between MOL and the Croat government have been strained over management influence and other issues since MOL tried and failed to become the majority owner of INA in early 2011.
Croatia has already found its former Prime Minister Ivo Sanader guilty of accepting a bribe in 2008 from MOL to grant it a dominant position in oil and gas firm INA, without having to buy a majority stake. Sanader appealed against his conviction and both he and MOL deny the charges.
An official Hungarian investigation has also found that neither MOL nor its officials took part in the alleged bribery.
MOL and the Croatian government began negotiating a new INA shareholder deal last month and some analysts said the fresh row was part of tactical positioning for the talks.
Hungary's stake of 24.6 percent in MOL is a key element in its state energy portfolio, which includes the gas units of Germany's E.ON, as Orban tries to boost government control over the energy sector in the country.
His government said the political campaign and legal steps against MOL's executive showed that Croatia was trying to exert pressure on MOL to try to regain control of INA.
"It is unacceptable for the Hungarian government that first the strategic partner is selected ... which saves Croatia's most important company INA during the crisis, and then there are attempts to intimidate this strategic partner later on with non-economic means, in order to regain control of INA without a buyout," the Hungarian government said in a statement.
The Croatian government had no immediate comment.
"We have to look into this and see what's going on," a source close to the government said.
The warrants for Hernadi's arrest were issued after he failed to appear for questioning in Zagreb last month.
Croatia , which owns almost 45 percent of INA, has accused MOL of enjoying excessive management rights and of failing to invest in INA.
MOL says it will not give up management control and wants to invest in INA but authorities have failed to issue necessary permits.
"I don't think this is about (the sale of INA stake), I think the government's suggestion is more like a tactical step," said Attila Vago, an analyst at Concorde. "As now that its biggest shareholder recommends it, MOL could tell the Croats that it would consider selling to a third party."
Another analyst said INA's upstream business and refineries could be attractive to Russian investors. Hungary is heavily dependent on imported energy from Russia, the region's former communist overlord.
"We should refresh the Russian story and think about the geopolitical interests," Ipopema Securities analyst Norbert Harcsa said. "Since Gazprom Neft's acquisition of (a majority stake in) NIS in Serbia the Russians should not be discounted as prospective buyers."
In an interview with Reuters last month, a senior MOL official declined to say whether MOL might sell its stake in INA if talks with Croatia failed.
He said MOL was not in talks with any potential buyers, including Russia's Rosneft which has been tipped by some media as a potential interested party.
MOL shares were down 1.7 percent at 15,725 forints at 1424 GMT, while the wider market was down 0.8 percent.
MOL has said Croatia's legal steps against its chief executive were against EU law and MOL would defend itself by all legal means against what it called "outrageous actions".
(This story has been corrected to fix wording in sixth paragraph)
(Additional reporting by Sandor Peto, Marton Dunai and Zoran Radosavljevic in Zagreb; Editing by Patrick Lannin and David Cowell)