3rd JANAF’s International Energy & Oil Conference, Energy Strategies - Challenges for Oil Companies Zagreb, 5 December 2017 Omišalj Terminal, 6 December 2017
OIL PIPELINE INFRASTRUCTURE FOR SECURITY OF CRUDE OIL SUPPLY OF CENTRAL EASTERN AND SOUTH EASTERN EUROPE EMPHASIS ON JANAF Gordana Sekulić PhD, JANAF Plc. CONTENT
General framework and challenges for oil industry Role of oil pipelines infrastructure in energy climate policy implementation Position and importance of JANAF pipeline and storage capacities in energy supply security of SE & Central European countries
2 GENERAL FRAMEWORK AND CHALLENGES FOR OIL INDUSTRY Climate policy implementation
Paris climate conference (COP21) in December 2015
Legally binding global climate deal
Document enters into force on 4 November 2016 Governments agreed
a long-term goal of keeping the increase in global average temperature to well below 2°C;
to aim to limit the increase to 1.5°C, since this would significantly reduce risks and the impacts of climate change EU's role
The EU has been at the forefront of international efforts towards a global climate deal
3 EU ENERGY STRATEGY
EU28 Primary Energy Consumption Structure 45,0%
40,0% 34,8% 33,0% 35,0%
30,0% Targets for 2030 23,3% 23,9% 25,0% 40% cut in greenhouse gas 19,1% 20,0% 16,7% emissions compared to 1990 levels 12,8% 15,0% 11,9% 12,0% 12,4% at least 27% share of renewable
10,0% energy consumption
5,0% at least 30% energy savings compared with the business-as- 0,0% Solid Oil Natural Gas Nuclear Renewable usual scenario Energy 2000 2015 2020 2030 Sources Oil consumption 2030 - 513 mil. tons Petroleum products would still represent 86-87% of the EU transport sector needs by 2030 compared to 94% today Non-energy use of oil - petrochemical industry Energy efficiency
4 REFINERIES vs OIL CONSUMPTION, EMISSIONS, PRICES
Oil Consumption (in mil. tons) 5000 4.418 4500 4.254 4041,9 4000
3500
3000
2500
2000
1500 962,6 858,8 884,6 1000
711,8 500 591 613 0 2007 2010 2014 2015 2016
EU28 World Total Europe & Eurasia
Crude oil prices (USD/bbl) 120,00 100,00 99,00 80,00 79,50 72,39 60,00 52,32 Oil 40,00 43,73 20,00 0,00 2007 2010 2014 2015 2016 5 IMPORT INCREASE vs SUPPLY SECURITY
Europe: Import of crude oil & petroleum products (in mil. tons) 800
700
600
500
400
300
200
100 Petroleum products import destination to Europe Others 0 14% 2011 2014 2015 2016
Crude oil Petroleum products Russia 45% Saudi Arabia 6% USA 17% India 7%
6 ENERGY SECURITY STRATEGY & OIL PIPELINE INFRASTRUCTURE
Strategic goals for 2030 relevant for oil pipeline infrastructure Increase of energy supply security by
Diversification of energy supply routes and sources
Strengthening interconnection capacities between countries
Strengthening strategic partnerships between consuming and producing countries through ownerships, common investments, etc. Establishment of 12 energy priority corridors and areas
Oil Supply Connections in CE Europe corridor (OSC) with 6 oil pipelines PCI
Croatia, Hungary, Slovakia, Czech R., Austria, Germany, Poland, Ukraine
7 EUROPEAN OIL PIPELINE-STORAGE INFRASTRUCTURE - KEY PILLARS OF ENERGY SECURITY
Crude oil pipeline network length:
Europe – 22.500 km
6.000
5.000
4.000
3.000
2.000
1.000
0
Crude oil import/export ports: Hamburg, Rotterdam, Primorsk, Ust-Luga, Russia – 80.820 km Marseille, Genoa, Trieste, Omišalj, Odessa, Ukraine – 4.514 km Novorossiysk, Batumi, Supsa, Kulevi, Ceyhan, Sidi Kerir
Crude oil & petroleum product storage capacities 8 CENTRAL-EASTERN & SOUTH-EASTERN EUROPE OIL PIPELINES NETWORK
Lengh: 9.852
9 OIL SUPPLY SECURITY - DIVERSIFICATION OF ROUTES AND SOURCES – CASPIAN CRUDE OIL
Caspian Pipeline Consortium Baku-Tbilisi-Ceyhan (BTC) - 2006 (CPC) - 2001
10 DIVERSIFICATION OF ROUTES – RUSSIAN OIL
Baltic Pipeline System I 2001 Baltic Pipeline System II - 2012
11 FURTHER DIVERSIFICATION OF OIL IMPORT ROUTES AND SOURCES
Implementation of Oil supply connections in Central Eastern Europe energy priority corridor (OSC) Planned oil pipelines projects
12 RECENT DIVERSIFICATION OF OIL SUPPLY
MOL’s (Hungary, Slovakia) refineries - seaborne crude imports from Omišalj/JANAF direction Unipetrol (Czech R.), PKN Orlen – Trieste/TAL, Omišalj/JANAF (plan) Plock and Mazeikiai refinery, PKN Orlen (Poland, Lithuania) - CPC (Novorossiysk), Iran, USA Gdansk refinery, Lotos (Poland) - North Sea, Iran, Nigeria, Canada, USA Mozyr refinery (Belarus) – Iran via Odessa/rail or Baltic ports Foe-sur-Mer (France) – USA ENI, Vitol – Baltic Urals Oil to Mediterranean region
13 JANAF IN EUROPEAN OIL PIPELINE NETWORK AND OIL FLOWS
JANAF pipeline has significant role in oil supply to refineries of SE & Central Europe
Refineries: Rijeka and Sisak (Croatia), Pancevo and Novi Sad (Serbia), Brod (Bosnia and Herz.), Szazhalombatta (Hungary), Slovnaft (Slovakia), Kralupy and Lilvinov (Czech R.)
1979-2017; oil transport 222 mil. tons Diversification in crude oil and petroleum products storage - 40% of revenues
14 JANAF OIL PIPELINE & STORAGE SYSTEM
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JANAF Plc. performs the activities of crude oil transport, as well as storage and reloading of crude oil and petroleum products Designed capacity - 34 million tons of crude oil transported annually (MTA), while the installed capacity amounts to 20 MTA Length of pipeline - 631 km Omišalj-Urinj subsea oil pipeline linking the Omišalj Terminal and INA-Oil Refinery Rijeka Subsea oil pipeline linking the Krk island and mainland Reversal flow on the Sisak-Croatian/Hungarian border-Sisak section
Five terminals with 1,7 mil m3 storage capacities for crude oil and 202.000 m3 for petroleum products: Crude oil: Omišalj (1,16 mil. m3 ), Sisak (500.000 m3), Virje (40.000 m3), Slavonski Brod (no storage tanks) Petroleum products: Omišalj (60.000 m3), Žitnjak-Zagreb (142.000 m3)
15 JANAF’S CONTRIBUTION TO OIL SUPPLY SECURITY
Oil import from two directions, Omišalj and Druzhba pipeline
Market of 6 countries with 9 refineries
Available pipeline and storage capacities for crude oil and petroleum products
Storage of compulsory oil and petroleum products stocks
16 OIL PRICES
Arabian, Dubai/Fortes/Brent ($/bbl) 120,00
100,00
80,00
60,00
40,00
20,00
0,00
17 CHALLENGES AND OPPORTUNITIES DOMESTIC AND SE & CENTRAL EUROPEAN OIL MARKET
Petroleum products consumption 35.000 Oil Import 30.000 30.000 25.000
20.000 25.000
15.000 000tons 20.000 10.000
5.000 15.000
0 000 tons 000
10.000
5.000
2010. 2015. 2025. 2030. 0 2010. 2015. 2020. 2025. 2030.
Croatia Bosnia&Herzegovina and Serbia Croatia, Hungary, Slovakia, Czech Hungary and Slovakia Czech R. Republic – oil consumption decrease Total B&H and Serbia – oil consumption increase/decrease
18 DIVERSIFICATION STRATEGY
JANAF's Total Income and Profit (in mil.HRK) Diversification strategy has been developed 800,000 and agreed between all stakeholders 700,000 600,000 Investment in storage capacities & 500,000 modernization and upgrading of oil 400,000 transportation and storage system 300,000 Improvement of services and communications 200,000 with customers 100,000 0,000 Key issue: Investment and activities in protection 2011. 2012. 2015. 2016. and safety of environment, humans and Total income Profit after taxes equipment
Share of export in total revenues
70,0% 68,0% 66,0% Structure of business activities 64,0% 62,0% 2013. 2016. 60,0% 58,0% 68,2% 62,6% 2014. 2015. 2016. Foreign market 31,8% 37,4%
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Oil Transport Oil and Petroleum 19 Product Storage EU PROJECTS OF COMMON INTEREST FOR ESTABLISHING OIL SUPPLY CORRIDOR IN SE EUROPE
OIL PIPELINE PROJECTS OF EU COMMON INTEREST
1. Litvinov - Spergau JANAF is one of three promoters 2. Adamowo - Brody 3. Cluster Pomeranian pipeline, including the following PCIs: (MOL, Transpetrol) of the EU o Construction of oil terminal in Gdańsk (phase II) project of common interest entitled o Expansion of Pomeranian pipeline JANAF-Adria pipelines: reconstruction, upgrade, 4. JANAF - Adria 5. Bratislava - Schwechat maintenance and capacity increase of the existing 6. TAL Plus JANAF and Adria oil pipelines linking Croatian Omišalj seaport to the Southern Druzhba
Strategic task: Increase of oil supply security of CE European countries (land locked refineries), using Omišalj import direction
EU PCI JANAF –Adria on the 1st List (2013) & the 2nd List (2015)
20 JANAF ADRIA PIPELINES Construction of two pipelines & 100% financed from companies budgets
Subsea pipeline from Krk island to mainland Százhalombatta-Šahy (Hungary-Slovakia) (August 2017) (February 2015) Length - 5 km, of which 730 m is under Capacity - 6 MTA, flow reversal the sea, flow reversal
Length - 128 km Subsea pipeline replaced crude oil Double increase in route capacity transport through the Krk bridge and increased safety of transport and supply Promoters: MOL and Transpetrol Promoter: JANAF
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21 JANAF - IMPORTANT PART OF CROATIAN & EU COMPULSORY CRUDE OIL & PETROLEUM PRODUCTS STOCKS SYSTEM
Omišalj Terminal – 240.000 m3
Sisak Terminal -240.000 m3
Žitnjak, Zagreb Terminal -126.000 m3
22 JANAF’S NEW STRATEGY TOWARD FURTHER COMPANY GROWTH AND ENERGY SUPPLY SECURITY
Strategic goals
Growth of traditional activities
Business diversification developing new projects aimed at obtaining new revenues
Strong entrepreneurship position
Company profitability, efficiency, share values increase, employees creativeness and satisfaction
Contribution to energy supply security of Croatia, South-Eastern and Central European countries enabling oil import from different directions and sources
23 NEW DEVELOPMENT PROJECTS
Protection and safety
Modernization
Crude oil transport & crude oil and petroleum products storage
Potential diversification: non-oil projects
Renewables
Electric car & boats, filling stations
Local projects
2424 PROTECTION AND SAFETY
With the aim of securing and protecting, as well as prolonging the oil pipeline life service, the company conducts, among others:
Pipeline rehabilitation projects
Technical and physical protection
SYSTEM MODERNIZATION SCADA, GIS, ELECTRICITY SYSTEM
Purpose: to increase the operation safety and efficiency, such as pipeline leakage detection; to monitor and plan batches and scraper/pig runs, etc.
25 SCADA - Control Centres at Omišalj and Sisak Terminals 25 NEW STRATEGIC DEVELOPMENT PROJECTS AT OMIŠALJ TERMINAL
Project of Reconstruction & Upgrade of Storage Facilities and Infrastructure Purpose of the Project is to improve terminal operations, capacity utilization & interoperability Further increase of storage and oil transport is expected
Storage construction of petroleum products 20.000 m3 is underway
New storage construction: crude oil (3*80.000 m3) – underway
Total storage capacities in next years:
crude oil - 1,4 mil. m3: JANAF total 1,94 mil. m3
petroleum products 80.000 m3: JANAF total 222.000 m3
Omišalj - Adriatic oil & petroleum products storage centre
26 Sisak Terminal: Potential new capacities: crude oil, depending on market demand
Virje Terminal: Oil transport northward to Central European refineries; Reversible flow
Slavonski Brod Terminal: Oil transport eastward to B&H and Serbian refineries
Žitnjak Terminal: Potential new capacities: petroleum products, depending on market demand
27 CONCLUSION
Oil remains dominant source of energy consumption in next two decades with great energy and economy potentials Oil companies will face many challenges as well as opportunities for further development Oil pipelines have great importance in oil supply security JANAF’s strategic position in energy supply security of SE & Central Europe Providing oil transport from two directions, particularly Omišalj, and numerous sources, available capacities, safe and reliable transport and storage Storing compulsory and ‘commercial’ oil & petroleum products stocks JANAF continues developing new projects and business diversification strategy Particularly, improving security, reliability, and quality of transportation and storage services Ensuring company growth and profitability Contributing to positive climate changes, energy market integration and economic development of SE & CE European countries
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