Emergency Oil Stocks in the Energy Community Level

Petroleum Development Consultant Limited, Energetski Institut Hrvoje Požar April 2011 Oil

www.energy-community.org This report was financed by the Energy Community.

Final Report

Energy Community 26 April 2011

Contents 1. Executive Summary ...... 1 2. Introduction ...... 4 3. Methodologies ...... 5 3.1. Methodology for Energy Demand Forecasting ...... 5 3.2. Stock Holding Obligation Calculation Methodology ...... 8 3.3. Data Reporting Requirements ...... 10 3.4. Data Collection and Processing ...... 10 3.5. Facilities Capital and Operating Cost Estimation ...... 14 3.6. Forward Crude Oil & Product Pricing ...... 15 3.7. Obligation Calculation Model Construction ...... 19 4. The Role of the Central Stockholding Agency ...... 20 4.1. CSE Formation and Constitution ...... 20 4.1.1. Hungary ...... 20 4.1.2. Czech Republic ...... 22 4.2. CSE Operation ...... 23 4.3. CSE Financing ...... 24 5. Albania ...... 25 5.1. Crude Oil and Oil Product Supply and Demand ...... 25 5.2. Emergency Oil Stock Obligations ...... 29 5.3. Current Oil Infrastructure ...... 32 5.4. Emergency Oil Stock Current Situation ...... 35 5.5. Additional required stockholding capacities ...... 36 5.6. Legal Review ...... 36 5.7. Financial Aspects of Oil Stocks ...... 37 5.8. Organizational Aspects of the Stockholding System ...... 39 5.9. Intervention in Case of Supply Disruption ...... 40 5.10. Required Legislative Changes ...... 40 5.11. Road Map ...... 41 6. Bosnia and Herzegovina ...... 44 6.1. Crude Oil and Oil Product Supply and Demand ...... 44 6.2. Emergency Oil Stock Obligation ...... 47 6.3. Current Oil Infrastructure ...... 49 6.4. Emergency Oil Stock Current Situation ...... 52 6.5. Additional required stockholding capacities ...... 52 6.6. Legal Review ...... 52 6.7. Financial Aspects of Oil Stocks ...... 53 6.8. Organizational Aspects of the Stockholding System ...... 55 6.9. Intervention in Case of Supply Disruption ...... 55 6.10. Required Legislative Changes ...... 55 6.11. Road Map ...... 56 7. Croatia ...... 58 7.1. Crude Oil and Oil Product Supply and Demand ...... 58 7.2. Emergency Oil Stock Obligation ...... 62 7.3. Current Oil Infrastructure ...... 64

Emergency Oil Stocks in the Energy Community Level i 26 April 2011

7.4. Emergency Oil Stock Current Situation ...... 68 7.5. Additional Required Stockholding Capacities ...... 68 7.6. Financial Aspects of Oil Stocks ...... 69 7.7. Legal Review ...... 69 7.8. Organizational Aspects of the Stockholding System ...... 70 7.9. Intervention in Case of Supply Disruption ...... 71 7.10. Required Legislative Changes ...... 72 7.11. Road Map ...... 72 8. FYR Macedonia ...... 74 8.1. Crude Oil and Oil Product Supply and Demand ...... 74 8.2. Emergency Oil Stock Obligation ...... 77 8.3. Current Oil Infrastructure ...... 80 8.4. Emergency Oil Stock Current Situation ...... 83 8.5. Additional Required Stockholding Capacities ...... 84 8.6. Legal Review ...... 85 8.7. Financial Aspects of Oil Stocks ...... 86 8.8. Organizational Aspects of the Stockholding System ...... 88 8.9. Intervention in Case of Supply Disruption ...... 89 8.10. Required Legislative Changes ...... 90 8.11. Road Map ...... 90 9. Moldova ...... 93 9.1. Crude Oil and Oil Product Supply and Demand ...... 93 9.2. Emergency Oil Stock Obligation ...... 95 9.3. Current Oil Infrastructure ...... 98 9.4. Emergency Oil Stock Current Situation ...... 99 9.5. Additional Required Stockholding Capacities ...... 99 9.6. Legal Review ...... 99 9.7. Financial Aspects of Oil Stocks ...... 99 9.8. Organizational Aspects of the Stockholding System ...... 101 9.9. Intervention in Case of Supply Disruption ...... 101 9.10. Required Legislative Changes ...... 101 9.11. Road Map ...... 101 10. Montenegro ...... 103 10.1. Crude Oil and Oil Product Supply and Demand ...... 103 10.2. Emergency Oil Stock Obligation ...... 105 10.3. Current Oil Infrastructure ...... 107 10.4. Emergency Oil Stock Current Situation ...... 108 10.5. Additional Required Stockholding Capacities ...... 108 10.6. Legal Review ...... 109 10.7. Financial Aspects of Oil Stocks ...... 109 10.8. Organizational Aspects of the Stockholding System ...... 111 10.9. Intervention in Case of Supply Disruption ...... 112 10.10. Required Legislative Changes ...... 112 10.11. Road Map ...... 112 11. Serbia ...... 114 11.1. Crude Oil and Oil Product Supply and Demand ...... 114

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11.2. Emergency Oil Stock Obligation ...... 118 11.3. Current Oil Infrastructure ...... 120 11.4. Emergency Oil Stock Current Situation ...... 123 11.5. Additional Required Stockholding Capacities ...... 123 11.6. Legal Review ...... 124 11.7. Financial Aspects of Oil Stocks ...... 124 11.8. Organizational Aspects of the Stockholding System ...... 126 11.9. Intervention in Case of Supply Disruption ...... 126 11.10. Required Legislative Changes ...... 127 11.11. Road Map ...... 127 12. UNMIK ...... 129 12.1. Crude Oil and Oil Product Supply and Demand ...... 129 12.2. Emergency Oil Stock Obligation ...... 130 12.3. Current Oil Infrastructure ...... 133 12.4. Emergency Oil Stock Current Situation ...... 135 12.5. Additional Required Stockholding Capacities ...... 135 12.6. Legal Review ...... 135 12.7. Financial Aspects of Oil Stocks ...... 135 12.8. Organizational Aspects of the Stockholding System ...... 137 12.9. Intervention in Case of Supply Disruption ...... 137 12.10. Required Legislative Changes ...... 137 12.11. Road Map ...... 138 13. Georgia ...... 140 13.1. Crude Oil and Oil Product Supply and Demand ...... 141 13.2. Emergency Oil Stock Obligations ...... 143 13.3. Current Oil Infrastructure ...... 145 13.4. Emergency Oil Stock Current Situation ...... 147 13.5. Additional Required Stock Holding Capacities ...... 147 13.6. Legal Review ...... 147 13.7. Financial Aspects of Oil Stocks ...... 147 13.8. Organizational Aspects of the Stockholding System ...... 148 13.9. Intervention is Case of Supply Disruption ...... 148 13.10. Required Legal Changes ...... 148 13.11. Road Map ...... 149 14. Turkey ...... 151 14.1. Crude Oil and Oil Product Supply and Demand ...... 152 14.2. Emergency Oil Stock Obligation ...... 154 14.3. Current Oil Infrastructure ...... 156 14.4. Emergency Stock Holding Current Situation ...... 159 14.5. Additional Required Stock Holding Capacity ...... 159 14.6. Legal Review ...... 159 14.7. Financial Aspects of Oil Stocks ...... 160 14.8. Organizational Aspects of the Stockholding System ...... 160 14.9. Intervention in Case of Supply Disruption ...... 160 14.10. Road Map ...... 161 15. Ukraine ...... 163

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15.1. Crude Oil and Oil Product Supply and Demand ...... 163 15.2. Emergency Oil Stock Obligation ...... 166 15.3. Current Oil Infrastructure ...... 167 15.4. Emergency Stock Holding Situation ...... 169 15.5. Additional Capacity Requirements ...... 169 15.6. Legal Review ...... 169 15.7. Financial Aspects of Oil Stocks ...... 169 15.8. Organisational Aspects of the Stockholding System ...... 170 15.9. Intervention in Case of Supply Disruption ...... 170 15.10. Required Legislative Changes ...... 170 15.11. Road Map ...... 170 16. Regional Approach ...... 172 16.1. Introduction ...... 172 16.2. Regulation ...... 172 16.3. Infrastructure ...... 173 16.4. Examples of regional approaches ...... 174 16.5. Economic Rationale for a Regional Approach ...... 178 16.6. Recommendations ...... 179 16.7. Community Road Map ...... 179 17. General Conclusions and Recommendations ...... 182 18. Appendix 1 Crude Oil and Oil Product Supply and Demand (Data Tables) 184 18.1. Albania...... 184 18.2. BiH ...... 186 18.3. Croatia ...... 188 18.4. FYR Macedonia ...... 191 18.5. Moldova ...... 193 18.6. Montenegro ...... 195 18.7. Serbia ...... 196 18.8. UNMIK ...... 199 18.9. Georgia ...... 200 18.10. Turkey...... 201 19. Appendix 2 Economic Forecasting Assumptions ...... 204

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Figures Figure 1 Planning Process Interaction ...... 5 Figure 2 MAED Model Main Inputs and Outputs ...... 8 Figure 3 Refiners Data Collection Sheet ...... 12 Figure 4 Importers Data Collection Form ...... 13 Figure 5 Product/Crude Price Ratios ...... 17 Figure 6 Crude Oil Production, Albania, 20072020 ...... 26 Figure 7 Crude Oil Import and Export, Albania, 20072020 ...... 26 Figure 8 Net Production of Petroleum Products, Albania, 20072020 ...... 27 Figure 9 Petroleum Product Imports, Albania, 20072020 ...... 27 Figure 10 Petroleum Product Exports, Albania, 20072020 ...... 28 Figure 11 Domestic Consumption of Petroleum Products, Albania, 20072020 ...... 28 Figure 12 Oil Product Supply and Demand, Albania, 20072020 ...... 29 Figure 13 Oil Infrastructure, Albania ...... 32 Figure 14 Wholesale Companies Obliged to Hold Emergency Oil Stocks, Albania 20012009 ...... 35 Figure 15 Proposed Buildup of Emergency Stocks Formation in Albania, 20122020...... 39 Figure 16 Gantt Diagram for Road Map, Albania ...... 43 Figure 17 Crude Oil Imports, BiH, 20072020 ...... 44 Figure 18 Net Production of Petroleum Products, BiH, 20072020 ...... 45 Figure 19 Petroleum Product Imports, BiH, 20072020 ...... 45 Figure 20 Petroleum Product Exports, BiH, 20072020 ...... 46 Figure 21 Domestic Consumption of Petroleum Products, BiH, 20072020 ... 46 Figure 22 Oil Product Supply and Demand, BiH, 20072020 ...... 47 Figure 23 Oil Infrastructure, BiH...... 50 Figure 24 Proposed Buildup of Emergency Stocks Formation in BiH, 2012 2020 ...... 55 Figure 25 Road Map Gantt Diagram, BiH ...... 57 Figure 26 Oil and Condensate Production, Croatia, 20072020 ...... 58 Figure 27 Crude Oil Import, Croatia, 20072020 ...... 59 Figure 28 Net Production of Petroleum Products, Croatia, 20072020 ...... 59 Figure 29 Petroleum Product Imports, Croatia, 20072020 ...... 60 Figure 30 Petroleum Product Exports, Croatia, 20072020 ...... 60 Figure 31 Domestic Consumption of Petroleum Products, Croatia, 20072020 ...... 61 Figure 32 Oil Product Supply and Demand, Croatia, 20072020 ...... 61 Figure 33 Oil Infrastructure, Croatia ...... 64 Figure 34 HANDA Organisation Chart, Croatia ...... 71 Figure 35 Road Map Gantt Diagram, Croatia ...... 73 Figure 36 Crude Oil Import, FYR Macedonia, 20072020 ...... 74 Figure 37 Net Production of Petroleum Products, FYR Macedonia, 20072020 ...... 75 Figure 38 Petroleum Product Imports, FYR Macedonia, 20072020 ...... 75

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Figure 39 Petroleum Product Exports, FYR Macedonia, 20072020 ...... 76 Figure 40 Domestic Consumption of Petroleum Products, FYR Macedonia, 20072020...... 76 Figure 41 Oil Product Supply and Demands, FYR Macedonia, 20072020 ... 77 Figure 42 Oil Infrastructure, FYR Macedonia ...... 80 Figure 43 Proposed Buildup of Emergency Stocks Formation in FYR Macedonia, 20122020 ...... 88 Figure 44 Organisation of Directorate for Compulsory Reserves of Oil and Oil Derivatives, FYR Macedonia ...... 89 Figure 45 Road Map Gantt Diagram, FYR Macedonia ...... 92 Figure 46 Crude Oil Production, Moldova, 20072020 ...... 93 Figure 47 Net Production of Petroleum Products, Moldova, 20072020 ...... 93 Figure 48 Petroleum Product Imports, Moldova, 20072020 ...... 94 Figure 49 Domestic Consumption of Petroleum Products, Moldova, 2007 2020 ...... 94 Figure 50 Oil Product Supply and Demand, Moldova, 20072020 ...... 95 Figure 51 Oil Infrastructure, Moldova ...... 98 Figure 52 Proposed Buildup of Emergency Stocks Formation in Moldova, 20122020...... 101 Figure 53 Road Map Gantt Diagram, Moldova ...... 102 Figure 54 Petroleum Product Imports, Montenegro, 20072020 ...... 103 Figure 55 Domestic Consumption of Petroleum Products, Montenegro, 2007 2020 ...... 104 Figure 56 Oil Product Supply and Demand, Montenegro, 20072020 ...... 104 Figure 57 Oil Infrastructure, Montenegro ...... 107 Figure 58 Proposed Buildup of Emergency Stocks Formation in Montenegro, 20112020...... 111 Figure 59 Road Map Gantt Diagram, Montenegro ...... 113 Figure 60 Oil and Condensate Production, Serbia, 20072020 ...... 114 Figure 61 Crude Oil Imports, Serbia, 20072020 ...... 115 Figure 62 Net Production of Petroleum Products, Serbia, 20072020 ...... 115 Figure 63 Petroleum Product Imports, Serbia, 20072020 ...... 116 Figure 64 Petroleum Product Exports, Serbia, 20072020 ...... 116 Figure 65 Domestic Consumption of Petroleum Products, Serbia, 20072020 ...... 117 Figure 66 Oil Products Supply and Demand, Serbia, 20072020 ...... 117 Figure 67 Oil Infrastructure, Serbia ...... 120 Figure 68 Proposed Buildup of Emergency Stocks Formation in Serbia, 2011 2020 ...... 126 Figure 69 Road Map Gantt Diagram, Serbia ...... 128 Figure 70 Petroleum Product Imports, UNMIK, 20072020 ...... 129 Figure 71 Domestic Consumption of Petroleum Products, UNMIK, 20072020 ...... 130 Figure 72 Oil Product Supply and Demand, UNMIK, 20072020 ...... 130 Figure 73 Oil Infrastructure ...... 133

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Figure 74 Proposed Buildup of Emergency Stocks Formation in UNMIK, 20112020...... 137 Figure 75 Road Map Gantt Diagram, UNMIK ...... 139 Figure 76 Crude Oil Imports and Exports, Georgia, 20072020 ...... 141 Figure 77 Petroleum Product Imports, Georgia, 20072020 ...... 142 Figure 78 Domestic Consumption of Petroleum Products, Georgia, 20072020 ...... 142 Figure 79 Oil Product Supply and Demand, Georgia, 20072020 ...... 143 Figure 80 Oil Infrastructure ...... 146 Figure 81 Map of Georgia Pipelines ...... 147 Figure 82 Road Map Gantt Georgia ...... 150 Figure 83 Crude Oil Supply, Turkey, 20082020 ...... 152 Figure 84 Petroleum Product Production, Turkey, 2008 2010 ...... 152 Figure 85 Petroleum Products Balance, Turkey, 20072020 ...... 153 Figure 86 Domestic Consumption of Petroleum Products, Turkey, 20072020 ...... 153 Figure 87 Oil Product Supply and Demand, Turkey, 20072020 ...... 154 Figure 88 Existing Infrastructure ...... 156 Figure 89 Refineries ...... 159 Figure 90 Road Map Gantt Diagram, Turkey ...... 162 Figure 91 Crude Oil Supply, Ukraine, 20082020 ...... 163 Figure 92 Petroleum Product Production, Ukraine, 2008 2010 ...... 164 Figure 93 Petroleum Products Balance, Ukraine, 20072020 ...... 164 Figure 94 Domestic Consumption of Petroleum Products, Ukraine, 20072020 ...... 165 Figure 95 Oil Product Supply and Demand, Ukraine, 20072020 ...... 165 Figure 96 Road Map Gantt Diagram, Ukraine ...... 171 Figure 97 Energy Community Road Map ...... 181

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Tables Table 1 Summary of Compliance Status with Directive 2009/119/EC...... 2 Table 2 Assumed Tankage Construction Costs ...... 14 Table 3 Storage Operating Cost Estimates ...... 14 Table 4 Assumed Product Prices ...... 18 Table 5 HUSA Cash Flows ...... 22 Table 6 Crude Oil Equivalent of Imports of Petroleum Products, Albania, 20092020...... 29 Table 7 90 Days Net Imports of Crude Oil and Petroleum Products, Albania, 20092020...... 30 Table 8 Crude Oil Equivalent of Inland Consumption, Albania, 20092020 ... 30 Table 9 61 Days of Average Daily Inland Consumption, Albania, 20092020 30 Table 10 Stockholding Obligation According to Average Daily Inland Consumption, Albania, 20102021 ...... 31 Table 11 Proposed Composition of Compulsory Stocks, Albania, 20102021 ...... 31 Table 12 Required Volume of Storage of Compulsory Stocks, Albania, 2010 2021 ...... 31 Table 13 Crude Oil Pipelines, Albania ...... 33 Table 14 Crude Oil and Intermediate Products Storage Capacities of ARMO, Albania ...... 34 Table 15 Petroleum Products Storage Capacities, Albania ...... 34 Table 16 Emergency Oil Stocks, Albania, 2010 ...... 35 Table 17 Required Volume and Corresponding Investments in Storage, Albania, 20102021 ...... 38 Table 18 Needed Investment in Crude Oil and Oil Products Purchase, Albania, 20102020 ...... 38 Table 19 Storage Tank Modernisation Plan, Albania, 20102020 ...... 38 Table 20 Storage Tank Construction Plan, Albania, 20102020 ...... 38 Table 21 Planned Costs (Storage Capacities, Crude Oil and Products Procurement and Operational Costs), Albania, 20102020 ...... 39 Table 22 Crude Oil Equivalent of Imports of Petroleum Products, BiH, 2009 2020 ...... 47 Table 23 90 Days of Daily Net Imports of Crude Oil and Petroleum Products, BiH, 20092020 ...... 48 Table 24 Crude Oil Equivalent of Inland Consumption, BiH, 20092020 ...... 48 Table 25 61 Days of Average Daily Inland Consumption, BiH, 20092020 .... 48 Table 26 Stockholding Obligation According to Average Daily Net Imports, BiH, 20102021 ...... 49 Table 27 Proposed Composition of Compulsory Stocks, BiH, 20102021 ..... 49 Table 28 Required Volume of Storage for Compulsory Stocks, BiH, 2010 2021 ...... 49 Table 29 Crude Oil and Intermediate Products Storage Capacities in Bosanski Brod Refinery, BiH ...... 51 Table 30 Storage Capacities for Petroleum Products, BiH ...... 51

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Table 31 Required Volume and Corresponding Investments in Storage, BiH, 20102020...... 53 Table 32 Needed Investment in Crude Oil and Oil Products Purchase, BiH, 20102020...... 53 Table 33 Storage Tank Modernisation Plan, BiH, 20102020 ...... 54 Table 34 Storage Tank Construction Plan, BiH, 20102020 ...... 54 Table 35 Planned Costs (Storage Capacities, Crude Oil and Products Procurement and Operational Costs), BiH, 20102020 ...... 54 Table 36 Crude Oil Equivalent of Imports of Petroleum, Croatia, 20092020 62 Table 37 90 Days of Daily Net Imports of Crude Oil and Petroleum Products, Croatia, 20092020 ...... 62 Table 38 Crude Oil Equivalent of Inland Consumption, Croatia, 20092020 .. 62 Table 39 61 Days of Average Daily Inland Consumption, Croatia, 20092020 ...... 63 Table 40 Stockholding Obligation According to Average Daily Net Imports, Croatia, 20102021 ...... 63 Table 41 Proposed Composition of Compulsory Stocks, Croatia, 20102021 63 Table 42 Required Volume of Storage for Compulsory Stocks, Croatia, 2010 2021 ...... 63 Table 43 Crude Oil and Semi Products Storage Capacities in Croatia ...... 65 Table 44 Petroleum Products Storage Capacities, Croatia ...... 66 Table 45 LPG Storage Capacities, Croatia ...... 67 Table 46 Emergency Stocks Held by HANDA, Croatia ...... 68 Table 47 Emergency Stocks Held by the Industry, Croatia ...... 68 Table 48 Coverage of Days of Consumption, Croatia ...... 68 Table 49 Croatian Capacity Requirements ...... 69 Table 50 Crude Oil Equivalent of Imports of Petroleum Products, FYR Macedonia, 20092020 ...... 77 Table 51 90 Days of Daily Net Imports of Crude Oil and Petroleum Products, FYR Macedonia, 20092020 ...... 78 Table 52 Crude Oil Equivalent of Inland Consumption, FYR Macedonia, 2009 2020 ...... 78 Table 53 61 Days of Average Daily Inland Consumption, FYR Macedonia, 20092020...... 78 Table 54 Stockholding Obligations According to Average Daily Net Imports, FYR Macedonia, 20102021 ...... 79 Table 55 Proposed Composition of Compulsory Stocks, FYR Macedonia, 20102021...... 79 Table 56 Required Volume of Storage for Compulsory Stocks, FYR Macedonia, 20102021 ...... 79 Table 57 Petroleum Products Storage Capacities, FYR Macedonia ...... 82 Table 58 Emergency Stocks Held by OKTA Refinery, FYR Macedonia ...... 83 Table 59 Emergency Stocks Held by Makpetrol, FYR Macedonia ...... 83 Table 60 Emergency Stocks Held by Lukoil, FYR Macedonia ...... 83 Table 61 Total Quantity of Emergency Stocks held in FYR Macedonia ...... 83 Table 62 Coverage of Days of Consumption, FYR Macedonia ...... 84

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Table 63 Required Volume and Corresponding Investments in Storage, FYR Macedonia, 20102021 ...... 87 Table 64 Needed Investment in Crude Oil and Products Purchase, FYR Macedonia, 20102020 ...... 87 Table 65 Crude Oil Equivalent of Imports of Petroleum Products, Moldova, 20082020...... 95 Table 66 90 Days of Daily Net Imports of Crude Oil and Petroleum Products, Moldova, 20082020 ...... 96 Table 67 Crude Oil Equivalent of Inland Consumption, Moldova, 20082020 96 Table 68 61 Days of Average Daily Inland Consumption, Moldova, 20082020 ...... 96 Table 69 Stockholding Obligations According to Average Daily Net Imports, Moldova, 20092021 ...... 97 Table 70 Proposed Composition of Compulsory Stocks, Moldova, 20092021 ...... 97 Table 71 Required Volume of Storage for Compulsory Stocks, Moldova, 2009 2021 ...... 97 Table 72 Required Volume and Corresponding Investments in Storage Capacities Construction, Moldova, 20102020 ...... 99 Table 73 Needed Investment in Crude Oil and Products Purchase, Moldova, 20102020...... 100 Table 74 Storage Tank Construction Plan, Moldova, 20102020 ...... 100 Table 75 Planned Costs (Storage Capacities, Crude Oil and Products Procurement and Operational Costs), Moldova, 20102020 ...... 100 Table 76 Crude Oil Equivalent of Imports of Petroleum Products, Montenegro 20092020...... 105 Table 77 90 Days of Daily Net Imports of Crude Oil and Petroleum Products, Montenegro, 20092020 ...... 105 Table 78 Crude Oil Equivalent of Inland Consumption, Montenegro, 2009 2020 ...... 106 Table 79 61 Days of Average Daily Inland Consumption, Montenegro, 2009 2020 ...... 106 Table 80 Stockholding Obligations According to Average Daily Net Imports, Montenegro, 20102021 ...... 106 Table 81 Proposed Composition of Compulsory Stocks, Montenegro, 2010 2021 ...... 106 Table 82 Required Volume of Storage for Compulsory Stocks, Montenegro, 20102021...... 107 Table 83 Petroleum Products Storage Capacities, Montenegro ...... 108 Table 84 Required Volume and Corresponding Investments in Storage, Montenegro, 20102020 ...... 110 Table 85 Needed Investment in Oil Products Purchase, Montenegro, 2010 2020 ...... 110 Table 86 Storage Tank Modernisation Plan, Montenegro, 20102020 ...... 110 Table 87 Storage Tank Construction Plan, Montenegro, 20102020 ...... 111

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Table 88 Planned Costs (Storage Capacities, Crude Oil and Products Procurement and Operational Costs), Montenegro, 20102020 ...... 111 Table 89 Crude Oil Equivalent of Imports of Petroleum Products, Serbia, 20092020...... 118 Table 90 90 Days of Daily Net Imports of Crude Oil and Petroleum Products, Serbia, 20092020 ...... 118 Table 91 Crude Oil Equivalent of Inland Consumption, Serbia, 20092020 . 119 Table 92 61 Days of Average Daily Inland Consumption, Serbia, 20092020 ...... 119 Table 93 Stockholding Obligation According to Average Daily Net Imports, Serbia, 20102021 ...... 119 Table 94 Proposed Composition of Compulsory Stocks, Serbia, 20102021 ...... 119 Table 95 Required Volume of Storage of Compulsory Stocks, Serbia, 2010 2021 ...... 120 Table 96 Transnafta Pipeline Transportation System, Serbia ...... 121 Table 97 Crude Oil and Semi Products Storage Capacity, Serbia ...... 121 Table 98 Petroleum Products Storage Capacities, Serbia ...... 122 Table 99 Required Volume and Corresponding Investments in Storage, Serbia, 20102021 ...... 125 Table 100 Required Investment in Oil Product Purchases, Serbia, 20102020 ...... 125 Table 101 Storage Tank Construction Plan, Serbia, 20102020 ...... 125 Table 102 Planned Costs (Storage Capacities, Crude Oil and Products Procurement and Operational Costs), Serbia, 20102020 ...... 125 Table 103 Crude Oil Equivalent of Imports of Petroleum Products, UNMIK, 20092020...... 131 Table 104 90 Days of Daily Net Imports of Crude Oil and Petroleum Products, UNMIK, 20092020 ...... 131 Table 105 Crude Oil Equivalent of Inland Consumption, UNMIK, 20092020 ...... 131 Table 106 61 Days of Average Daily Inland Consumption, UNMIK, 20092020 ...... 132 Table 107 Stockholding Obligation According to Average Daily Net Imports, UNMIK, 20102021 ...... 132 Table 108 Proposed Composition of Compulsory Stocks, UNMIK, 20102021 ...... 132 Table 109 Required Volume of Storage for Compulsory Stocks, UNMIK, 2010 2021 ...... 132 Table 110 Storage Capacities for Oil Products ...... 134 Table 111 Required Volume and Corresponding Investments in Storage, UNMIK, 20102021 ...... 136 Table 112 Needed Investment in Oil Products Purchase, UNMIK, 20102020 ...... 136 Table 113 Storage Tank Modernisation Plan, UNMIK, 20102020 ...... 136 Table 114 Storage Tank Construction Plan, UNMIK, 20102020 ...... 136

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Table 115 Planned Costs (Storage Capacities, Crude Oil and Products Procurement and Operational Costs), UNMIK, 20102020 ...... 136 Table 116 Crude Oil Equivalent of Imports of Petroleum Products, Georgia, 20092020...... 143 Table 117 90 Days of Daily Net Imports of Crude Oil and Petroleum Products, Georgia, 20092020 ...... 144 Table 118 Crude Oil Equivalent of Inland Consumption, Georgia, 20092020 ...... 144 Table 119 61 Days of Average Daily Inland Consumption, Georgia, 2009 2020 ...... 144 Table 120 Proposed Composition of Compulsory Stocks, Georgia, 20102020 ...... 145 Table 121 Required Volume of Storage of Compulsory Stocks, Georgia, 2010 2021 ...... 145 Table 122 Georgia Storage Capacity ...... 146 Table 123 Required Volume and Corresponding Investments in Storage, Georgia, 20102020 ...... 148 Table 124 Georgia Oil Product Purchase ...... 148 Table 125 Crude Oil Equivalent of Imports of Petroleum Products, Turkey, 20092020...... 154 Table 126 90 Days of Daily Net Imports of Crude Oil and Petroleum Products, Turkey, 20092020 ...... 155 Table 127 Crude Oil Equivalent of Inland Consumption, Turkey, 20092020 ...... 155 Table 128 61 Days of Average Daily Inland Consumption, Turkey, 20092020 ...... 155 Table 129 Proposed Composition of Compulsory Stocks, Turkey, 20092020 ...... 156 Table 130 Required Volume of Storage of Compulsory Stocks, Turkey, 2009 2020 ...... 156 Table 131 Storage Capacity ...... 157 Table 132 Turkish Industry Stock Holding Requirements ...... 159 Table 133 Required Volume and Corresponding Investments in Storage, Turkey, 20102020 ...... 160 Table 134 Crude Oil Equivalent of Imports of Petroleum Products, Ukraine, 20092020...... 166 Table 135 90 Days of Daily Net Imports of Crude Oil and Petroleum Products, Ukraine, 20092020 ...... 166 Table 136 Crude Oil Equivalent of Inland Consumption, Ukraine, 20092020 ...... 166 Table 137 61 Days of Average Daily Inland Consumption, Ukraine, 20092020 ...... 167 Table 138 Proposed Composition of Compulsory Stocks, Ukraine, 20092020 ...... 167 Table 139 Required Volume of Storage of Compulsory Stocks, Ukraine, 2009 2020 ...... 167

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Table 140 Ukraine Ports & Terminals ...... 167 Table 141 Storage Capacity ...... 168 Table 142 Refineries ...... 168 Table 143 Required Volume and Corresponding Investments in Storage, Ukraine 20102020 ...... 169 Table 144 Commodity Purchase Capital Expenditure, Ukraine ...... 169 Table 145 EU Bilateral Emergency Oil Stocks Agreements ...... 175 Table 146 Oil Production, Albania, 20072020 ...... 184 Table 147 Crude Oil Import and Export, Albania, 20072020 ...... 184 Table 148 Net Production of Petroleum Products, Albania, 20072020 ...... 184 Table 149 Refinery Own Use, Albania, 20072020 ...... 184 Table 150 Petroleum Product Imports, Albania, 20072020 ...... 184 Table 151 Petroleum Product Exports, Albania, 20072020 ...... 185 Table 152 Domestic Consumption of Petroleum Products, Albania, 20072020 ...... 185 Table 153 Crude Oil Import, BiH, 20072020 ...... 186 Table 154 Net Production of Petroleum Products, BiH, 20072020 ...... 186 Table 155 Refinery Own Use, BiH, 20072020 ...... 186 Table 156 Petroleum Product Imports, BiH, 20072020 ...... 186 Table 157 Petroleum Product Exports, BiH, 20072020 ...... 187 Table 158 Domestic Consumption of Petroleum Products, BiH, 20072020 187 Table 159 Oil and Condensate Production, Croatia, 20072020 ...... 188 Table 160 Crude Oil Import, Croatia, 20072020 ...... 188 Table 161 Net Production of Petroleum Products, Croatia, 20072020 ...... 188 Table 162 Refinery Own Use, Croatia, 20072020 ...... 188 Table 163 Petroleum Product Imports, Croatia, 20072020 ...... 189 Table 164 Petroleum Product Exports, Croatia, 20072020 ...... 189 Table 165 International Bunkers, Croatia, 20072020 ...... 189 Table 166 Stock Changes, Croatia, 20072020 ...... 190 Table 167 Domestic Consumption of Petroleum Products, Croatia, 20072020 ...... 190 Table 168 Crude Oil Import, FYR Macedonia, 20072020 ...... 191 Table 169 Net production of Petroleum Products, FYR Macedonia, 20072020 ...... 191 Table 170 Refinery Own Use, FYR Macedonia, 20072020 ...... 191 Table 171 Petroleum Product Imports, FYR Macedonia, 20072020 ...... 191 Table 172 Petroleum Product Exports, FYR Macedonia, 20072020...... 192 Table 173 Stock Changes, FYR Macedonia, 20072020 ...... 192 Table 174 Domestic Consumption of Petroleum Products, FYR Macedonia, 20072020...... 192 Table 175 Crude Oil Production, Moldova, 20072020 ...... 193 Table 176 Net Production of Petroleum Products, Moldova, 20072020 ..... 193 Table 177 Petroleum Product Imports, Moldova, 20072020 ...... 193 Table 178 Petroleum Product Exports, Moldova, 20072020 ...... 194 Table 179 Stock Changes, Moldova, 20072020 ...... 194

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Table 180 Domestic Consumption of Petroleum Products, Moldova, 2007 2020 ...... 194 Table 181 Petroleum Product Imports, Montenegro, 20072020 ...... 195 Table 182 Domestic Consumption of Petroleum Products, Montenegro, 2007 2020 ...... 195 Table 183 Oil and Condensate Production, Serbia, 20072020 ...... 196 Table 184 Crude Oil Import, Serbia, 20072020 ...... 196 Table 185 Net Production of Petroleum Products, Serbia, 20072020...... 196 Table 186 Refinery Own Use, Serbia, 20072020 ...... 196 Table 187 Petroleum Product Imports, Serbia, 20072020 ...... 197 Table 188 Petroleum Product Exports, Serbia, 20072020 ...... 197 Table 189 Stock Changes, Serbia, 20072020 ...... 197 Table 190 Domestic Consumption of Petroleum Products, Serbia, 20072020 ...... 198 Table 191 Petroleum Product Imports, UNMIK, 20072020 ...... 199 Table 192 Domestic Consumption of Petroleum Products, UNMIK, 20072020 ...... 199 Table 193 Georgia Petroleum Product Consumption, 20072020 ...... 200 Table 194 Georgian Domestic Petroleum Product Import, 20072020...... 200 Table 195 Oil and Condensate Production, Turkey, 20072020 ...... 201 Table 196 Crude Oil Import, Turkey, 20072020 ...... 201 Table 197 Net Production of Petroleum Products, Serbia, 20072020...... 201 Table 198 Refinery Own Use, Turkey, 20072020 ...... 201 Table 199 Petroleum Product Imports, Turkey, 20072020 ...... 202 Table 200 Petroleum Product Exports, Turkey, 20072020 ...... 202 Table 201 Domestic Consumption of Petroleum Products, Turkey, 20072020 ...... 202 Table 202 GDP Data Used in Economic Forecasting ...... 204 Table 203 Albania MAED Inputs ...... 205 Table 204 MAED Inputs BiH ...... 206 Table 205 MAED Inputs Croatia ...... 207 Table 206 MAED Inputs FYR Macedonia ...... 208 Table 207 MAED Inputs Moldova ...... 209 Table 208 MAED Inputs Montenegro ...... 210 Table 209 MAED Inputs Serbia ...... 211 Table 210 MAED Inputs UNMIK ...... 212

Emergency Oil Stocks in the Energy Community Level xiv 26 April 2011

Abbreviations

€ Euro APETRA The Belgian stockholding agency API American Petroleum Institute ARA Antwerp, Rotterdam, Amsterdam ARMO Albanian Refining and Marketing of Oil ASMR The Czech Administration of State Material Reserves bbl barrel BE Belgium BiH Bosnia and Herzegovina BTC BakuTbilisiCeyan CHEM chemicals CIA Central Intelligence Agency cif cost, insurance, freight CP Contracting Parties CSE Central Stockholding Entity (or Agency) CY Cyprus CZ Czech Republic DE Germany DK Denmark DORS Downstream Oil Reporting System dwt dead weight tonnage EC European Commission EIHP Energy Institute Hrvoye Pozar EE Estonia EL Greece EN590 European Norm 590, a standard European grade of diesel fuel ES Spain EU European Union FI Finland FO fuel oil fob free on board FR France FYR Former Yugoslav Republic GIFP Giurgiulesti International Free Port HANDA The Croatian stockholding agency HRK Croatian Kuna HU Hungary HUSA The Hungarian Association of Crude Oil and Oil Products Stockpiling IAEA International Atomic Energy Agency

Emergency Oil Stocks in the Energy Community Level xv 26 April 2011

IE Ireland IEA International Energy Agency IEJE Institute Economique et Juridique de l′Energie INA Industrija Nafte d. d., a Croatian oil company IT Italy JANAF Jadranski naftovod, a Croatian pipeline company JP4 A type of naphthabased jet fuel, also “Jet Propellant” JP Transnafta A Serbian pipeline company KKKSz The former Hungarian Association of Crude Oil and Oil Products Stockpiling, now called HUSA km kilometre kt/y thousand tonnes per year l litre LPG liquefied petroleum gas LT Lithuania LU Luxembourg LV Latvia m3 cubic metre MAED Model for Analysis of Energy Demand Med Mediterranean MEDEE Modele d’Evolution de la Demande d’Energie – a sectoral enduse type energy demand model MESSAGE Model for Energy Supply Strategy Alternatives and their General Environmental Impact MKD Macedonia Denar MOL Magyar Olaj és Gázipari, an Hungarian oil & gas company MT Malta Mt/y million tonnes per year NESO The Turkish National Emergency Sharing Organisation NGL natural gas liquid NIS Naftna Industrija Srbije, a Serbian oil company NL Netherlands NORA National Oil Reserves Agency (in Ireland) OKTA An oil refinery in the Macedonia, owned by Hellenic Petroleum OMV Österreichischen Mineralölverwaltung Aktiengesellschaft, an Austrian oil company PET petroleum products PPRS Petroleum Production Reporting System prsn person PT Portugal RSD Serbian Dinar

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SE Sweden SI Slovenia SK Slovak Republic SOCAR State Oil Company of Azerbaijan Republic t tonnes tkm Tonne kilometre TNKBP Company formed by the merger of British Petroleum’s Russian oil and gas assets and the oil and gas assets of Alfa, Access/Renova group, the latter being known as Tyumen Nefte Kompany (Tyumen Oil Company) toe tonnes of oil equivalent UL95 Unleaded 95, unleaded gasoline with a research octane number of 95 UK United Kingdom (of Great Britain and Northern Ireland) UNMIK United Nations Interim Administration Mission in Kosovo US$ United States dollar VEG vegetable oils

Emergency Oil Stocks in the Energy Community Level xvii 26 April 2011

1. Executive Summary This is the Final Report for the study on Emergency Oil Stocks in the Energy Community Level.

The study has found:

• All the Beneficiaries need, to some extent, to enhance their crude oil and petroleum product stockholding systems in order to be in compliance with EU Directive 2009/119/EC.

• All Beneficiaries need to make some changes to their legal and regulatory framework to comply with the Directive.

• Most Beneficiaries should be able to become compliant with the Directive by 2020 through the adoption of a phased programme of changes and investment

This report is based on analysis and benchmarking of the information gathered from the Beneficiaries. A summary of the findings is shown in Table 1.

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Table 1 Summary of Compliance Status with Directive 2009/119/EC

Total Legislative changes Required Volume (thousand m 3) Required Investments (Million €) Investment CSE status required (Million €) Beneficiary Purchase of New storage Storage New storage Storage crude oil and 2011-2020 construction modernisation construction modernisation products Albania 97 140 21.0 13.4 91.9 126.3 Needs to be set up Minor Bosnia and 374 182 86.2 16.8 212.0 126.3 Needs to be set up Moderate Herzegovina Croatia 600* A more detailed study has been carried out by HANDA HANDA in operation Minor

FYR Macedonia 244* 50.0 80.0 130.0 Directorate in place Minor

Major – no relevant laws Moldova 327* 78.0 130.0 208.0 Needs to be set up in place

Montenegro 38.8 67.2 9.3 6.5 60.0 75.8 Needs to be set up Moderate

Government Serbia 837.0* 172.0 370.0 542.0 department fulfilling Moderate the role Major UNMIK 223.0 34.0 53.5 3.3 100.0 156.8 Needs to be s et up

Major – no relevant laws Georgia 906.0* 218.0 359.0 247.2 Needs to be set up in place

Believed to be moderate Turkey 11,500.0* 2,750.0 4,800.0 7,550.0 NESO in operation and underway Ukraine 9,225* 2,200.0 3,300.0 5,500.0 Data withh eld

*Indicates a requirement to build new facilities but does not include possible utilisation of existing storage facilities

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In the course of the study the Consultant came to the following conclusions:

• Data reporting in general needs to improve for technical compliance to be achieved under the Directive

• The Beneficiaries are more inclined to setting up Central Stockholding Entities rather than obligating operating companies which, when tried, has caused reporting and compliance issues

• In order to increase security of oil supply in the region the Consultant recommends establishment of a Coordination Entity for oil and petroleum products consisting of representatives of the Beneficiaries and chaired by the Energy Community. The main tasks of the Coordination Entity would be monitoring of oil market and establishment of coordinated emergency response procedures.

• All the Beneficiaries have a realistic chance of being compliant with the Directive by 2020.

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2. Introduction This is the Final Report for the study on Emergency Oil Stocks in the Energy Community Level.

The study covered the eight Contracting Parties (CP) of the Energy Community (Albania, Bosnia and Herzegovina, Croatia, FYR of Macedonia, Moldova, Montenegro, Serbia and UNMIK) and three Observer countries (Georgia, Turkey and Ukraine), further called "Beneficiaries".

Petroleum Development Consultants (PDC) conducted this study with the Energy Institute Hrvoye Pozar (EIHP) of Croatia.

The key objectives of this study were:

• Recommendations on the crude oil and petroleum product stockholding systems for the Beneficiaries, in accordance with EU Directive 2009/119/EC

• Determine at a high level the stock holding obligation and costs for each Beneficiary in the time frame of 2011 to 2020

• The development of a work programme for compliance with Directive 2009/119/EC by the Contracting Parties

• Identification of issues and problems facing the Beneficiaries in achieving compliance with the Directive and the development of proposed solutions

• Examine the possibility of a regional approach to coordinating stock holding activities

The analysis and benchmarking in this study was heavily reliant on information gathered from and provided by the Beneficiaries. The findings of the study were presented to the Beneficiaries at a meeting in Vienna on 1 March 2011 and comments and feedback received subsequently have been included in this Final Report.

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3. Methodologies This section gives the methodology used for the forecasting of the demand scenarios, calculation of the stocking obligations, the initial estimation of facilities construction and operating costs and explanation of the forward pricing scenario for crude oil and petroleum products. 3.1. Methodology for Energy Demand Forecasting Models prepared by the International Atomic Energy Agency (IAEA) were used to predict demand. The models MAED (Model for Analysis of Energy Demand) and MESSAGE (Model for Energy Supply Strategy Alternatives and their General Environmental Impact) are particularly suitable for regional and scenario analysis.

The MAED model is used to project useful/final energy demand. Useful demand is an input to MESSAGE model. Energy systems are modelled and optimised using MESSAGE model. Figure 1 shows the main interaction in the planning process and shows the use of the MAED and MESSAGE models.

Figure 1 Planning Process Interaction

Social and Economic Perspective Development drivers (economy, population,…)

Assesment of Assesment of energy needs Technology natural resources MAED model choices

Exogenous Analysis of energy supply options Regional assumptions MESSAGE model exchange

Environmental Financial and other burdens and mitigation resource requirements

Sustainable energy strategy Investment schedule, energy supply prices, fuel consumption, emissions,…

The methodology of the MAED model was originally developed by. B. Chateau and B. Lapillonne of the Institute Economique et Juridique de l′Energie (IEJE) of the University of Grenoble, France, and was presented as

Emergency Oil Stocks in the Energy Community Level 5 26 April 2011

the MEDEE model. The IAEA adopted a simplified version of this model (MEDEE2) and incorporated important modifications to make it more suitable for application in the developing countries, and it was named as the MAED model.

The MAED model evaluates future energy demand based on medium to long term scenarios of socioeconomic, technological and demographic developments. The model relates systematically the specific energy demand for producing various goods and services identified in the model to the corresponding social, economic and technological factors that affect this demand.

Energy demand is disaggregated into a large number of enduse categories; each one corresponding to a given service or to the production of a certain product. The nature and level of the demand for goods and services are a function of several determining factors including

• population growth • number of inhabitants per dwelling • number of electrical appliances used in households • peoples’ mobility and preferences for transportation modes • national priorities for the development of certain industries or economic sectors • the evolution of the efficiency of certain types of equipment • market penetration of new technologies or energy forms

The expected future trends for these determining factors, which constitute scenarios, are exogenously 1 introduced.

An understanding of these determining factors permits the evaluation of the various categories of energy demand for each economic sector to be considered. The total energy demand for each enduse category is aggregated into four main energy consumer sectors

• industry (including agriculture, construction, mining and manufacturing) • transportation • commercial • residential

1 In an economic model, an exogenous change is one that comes from outside the model and is unexplained by the model. For example, in the simple supply and demand model, a change in consumer tastes or preferences is unexplained by the model and also leads to endogenous changes in demand that lead to changes in the equilibrium price. Put another way, an exogenous change involves an alteration of a variable that is autonomous, i.e., unaffected by the workings of the model.

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The model provides a systematic accounting framework for evaluating the effect on energy demand during a change in economics or in the standard of living of the population.

The starting point for using the MAED model is construction of base year energy consumption patterns within the model. This requires compiling and reconciling necessary data from different sources, obtaining and calculating various input parameters and adjusting them to establish a base year energy balance. This helps to calibrate the model to the country’s specific situation.

The next step is developing future scenarios, specific to a country’s situation and objectives. The scenarios can be subdivided into two subscenarios:

• The socioeconomic system describing the fundamental characteristics of the social and economic evolution of the country • The other related to the technological factors affecting the calculation of energy demand, for example, the efficiency and market penetration potential of each alternative energy form.

The key to plausible and useful scenarios is internal consistency of assumptions, especially for social, economic and technological evolution. A good understanding of the dynamic interplay among various driving forces or determining factors is necessary. The model output, i.e. future energy demand, is just a reflection of these scenario assumptions. The evaluation of output and the modification of initial assumptions is the basic process by which reasonable results are derived.

The model focuses exclusively on energy demand, and even more specifically on demand for specified energy services. When various energy forms, i.e. electricity, fossil fuels, etc., are competing for a given enduse category of energy demand, this demand is calculated first in terms of useful energy and then converted into final energy, taking into account market penetration and the efficiency of each alternative energy source, both specified as scenario parameters. Nonsubstitutable energy uses, such as motor fuels for cars, electricity for specific uses (electrolysis, lighting etc.), are calculated directly in terms of final energy.

Demand for fossil fuels is therefore not broken down in terms of coal, gas or oil, because this energy supply mix largely depends on the technological possibilities of supply and relative prices of these fuels, aspects that are outside the scope of the MAED analysis. The substitution of fossil fuels by alternative energy forms (i.e., solar, district heat, etc.) is nevertheless estimated due to the importance of the structural changes in energy demand that these energy forms may introduce in the future. Since these substitutions

Emergency Oil Stocks in the Energy Community Level 7 26 April 2011

will be essentially determined by policy decisions, they are to be taken into account at the stage of formulating and writing the development scenarios.

Figure 2 MAED Model Main Inputs and Outputs

3.2. Stock Holding Obligation Calculation Methodology The stock holding requirement is determined for each country according to the Emergency Oil Stock Obligation Directive 2009/119/EC. This requires that Member States shall ensure that the total oil stocks maintained at all times within the Community for their benefit correspond, at the very least, to 90 days of average daily net imports or 61 days of average daily inland consumption, whichever of the two quantities is greater.

The average daily net imports is calculated on the basis of the crude oil equivalent of imports which is obtained by calculating the sum of the net imports of crude oil, NGL, refinery feedstocks and adding this to the net imports of all other petroleum products, excluding naphtha, adjusted to take account of stock changes and multiplied by a factor of 1.065. From the sum of the net imports of crude oil, NGL, refinery feedstocks a deduction is made of 4% to account for naphtha yield.

Inland consumption is the sum of the aggregate observed gross inland deliveries of the following products:

• motor gasoline • aviation gasoline • gasolinetype jet fuel (naphthatype jet fuel or JP4) • kerosenetype jet fuel • other kerosene • gas/diesel oil (distillate fuel oil) • fuel oil (high sulphur content and low sulphur content)

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The crude oil equivalent of inland consumption is calculated by multiplying the sum of the aggregate observed gross inland deliveries by a factor of 1.2.

The emergency stocks must take the form of at least the greater of 30 days of products within saleable categories and there is assumed to be a requirement to allow for 10% of the stocks to be unavailable due to technical problems such as remaining in tank bottoms and being unavailable for drawdown.

Modelling of emergency stocks obligation in countries with refineries assumed maximal amount of crude oil was because the building of storage capacities for crude oil and storing of crude oil is cheapest than those of petroleum products, as well as the price of crude oil itself. On the other hand, countries with no domestic refinery were assumed to hold the entire obligation in petroleum products. Amounts of petroleum products held were estimated on basis of the inland consumption of main products (motor gasoline, kerosene and jet fuel, gas/diesel oil, residual fuel oil). One must bear in mind that each country has to set up its own structure of emergency stocks and that the structure of stocks presented in the study is by no means binding for Beneficiaries.

In estimating the required storage, the largest calculated required volume of storage for each individual petroleum product and crude oil in the modelled period is taken and rounded up to give the required volume of storage. This approach is then taken forward to calculate capital investments in compulsory oil storage capacities. It is important to note that these calculated volumes and capital expenditures do not include the possible utilisation of existing storage capacities unless the Consultant assessed that some volume of storages need modernisation. In other words, the calculation assumes that storage for all the required stocks must be built in addition to existing storage capacities.

Biofuels

Directive 2009/119/EC recognises that biofuels are becoming increasingly required in the energy mix of the EU and subsequently the Energy Community and other legislation and targets (e.g. the 202020 Scheme) require increased use of biofuels within a 10 year time frame.

Under Directive 2009/119/EC, when calculating the stock holding obligations, biofuels shall be taken into account when blended and consumed with transport fuels. When accounting for the actual stockholding, biofuels should only be counted as part of the physical stockholding where they are blended to the appropriate specification or there is the intention and capability to blend them to required specification.

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3.3. Data Reporting Requirements Directive 2009/119/EC sets out the requirements for data collection which are required to calculate the stock holding obligation as set out in Section 3.2 (which is covered by EC Regulation 1099/2008) and also requirements for reporting actual stock levels. The data reports from the facilities and companies holding the stocks should be collated by one central body. This should be done by an appropriate government department or by a Central Stock Holding Entity where one has been created. The reporting requirements are summarised here:

• Specific Stocks (Those held by a Central Stockholding Entity) and consisting of certain fuel types) must be catalogued in terms of volume and location • A statistical summary of Specific Stocks must be submitted to the Commission monthly giving, location, volumes and days of supply equivalent of the Specific Stocks based on the last day of the previous calendar month • A statistical summary of Commercial Stocks must also be submitted to the Commission monthly • Commercial statistical summaries must be aggregated to protect commercial confidentiality • An annual register of stocks must be kept and continuously updated

It is important to note that the reporting of inventories must happened promptly and reports must be processed and submitted to the commission within the following calendar month to which they relate. The Commission will collate and store all submitted data and make available digitally as appropriate. 3.4. Data Collection and Processing In order to comply with Directive 2009/119/EC, each Beneficiary will have to collate and process large amounts of data from many different sources. The processing has definitive time scales which mean it must be efficiently conducted and not place too greater burden on the companies or the body which is responsible for the data collection and processing.

In order the do this, EU Member States have implemented electronic reporting systems to collate the data and produce reports the required reports both to go to the European Commission and also for emergency planning purposes. The collated data can then be fed into models to determine the obligation for holding emergency stocks. The data are input electronically by companies. This is advantageous as the data are only typed out once, and are already in a standardised format and easy to use.

Emergency Oil Stocks in the Energy Community Level 10 26 April 2011

The United Kingdom operates two systems which are used in the collection of data for calculation stockholding obligations:

• The Petroleum Production Reporting System (PPRS). PPRS is an administrative data collection system that requires licensees operating on the UK Continental Shelf to submit monthly details of their hydrocarbon (both oil and gas) production to the Department. PPRS is used to report flows, stocks and of crude oils and Natural Gas Liquids from field level through to final disposal. It is a condition of operation on the UKCS that companies submit monthly returns to government.

• Downstream oil information, including information on the transformation of crude oil into petroleum products at refineries, imports and exports of petroleum products, and the delivery of these products into consumption by various users, is collected through the Downstream Oil Reporting System (DORS). DORS was developed in cooperation with industry.

In order to comply with DORS, refiners and importers have to submit completed forms to the Department of Energy and Climate change on a monthly basis. Examples of the forms can be seen in Figure 3 and Figure 4.

Emergency Oil Stocks in the Energy Community Level 11 26 April 2011

Figure 3 Refiners Data Collection Sheet

Source: UK Emergency Oil Stocks A guide to the measures the UK adopts to meet its international obligations to maintain emergency oil stocks

Emergency Oil Stocks in the Energy Community Level 12 26 April 2011

Figure 4 Importers Data Collection Form

Source: UK Emergency Oil Stocks A guide to the measures the UK adopts to meet its international obligations to maintain emergency oil stocks

Emergency Oil Stocks in the Energy Community Level 13 26 April 2011

3.5. Facilities Capital and Operating Cost Estimation Capital construction costs for the required investment in storage capacity are estimated on the basis of the results of the Consultants survey and experience of terminal and tankage construction projects implemented in Europe in the recent past.

Average costs of these projects amounted to 240 €/m3 for petroleum products and 200 €/m 3 for crude oil. They include all the costs such as land acquisition, construction work, state fees, the necessary infrastructure, ground works and labour costs. Of course, there is potential for variation of these costs for the different countries which will for some countries have an effect on the total net investment required. It is the Consultants aim to give an outline of the approximate scale of the likely costs and definitive engineering studies for each country should be undertaken. The Consultant does however note that there is potential for significant deviation from the average price of construction for the jet fuel tanks because of the small volume required. However, given that their share in total storage capacity is relatively small, there should be relatively little impact on the total estimated investment requirements.

Table 2 Assumed Tankage Construction Costs Commodity Cost ( € / m3) Crude Oil 200 Petroleum Products 240 Source: PDC & EIHP Analysis

The Consultant has also taken an average of normal operating costs in Europe as an approximation of operating costs for emergency oil stocks storage. Operating costs used in this study present the average operating costs attained at the existing terminals for crude oil and petroleum products. They include terminal maintenance costs, labour costs, energy costs, fees and maintenance of stocks and a breakdown of the costs used is given in Table 3.

Table 3 Storage Operating Cost Estimates Input Cost ( € / m3) Maintenance 3.0 Salaries 4.0 Energy 0.4 Fees 3.8 Stocks maintenance (e.g. Cycling) 4.0 Total 15.2 Source: PDC & EIHP Analysis

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Each country has to carry out its own detailed analysis of storage capacities as well as economic and financial analyses of existing or future stockholding system. The Beneficiaries has to be aware that there are a number of ways to achieve the obligation of stockholding. There are two basic models of stockholding system. One of them is an agency or a similar independent body that would take care of all aspects of emergency stockholding and another one is industry holding emergency stocks. There are also a number of variations in between that may be short term in a transitional period or long term. Organisational and financial aspects of stockholding presented in the study are only one of the many ways of achieving the obligatory targets and it should be used as a general guideline for countries in their effort of implementing the Directive 2009/119/EC. The competent institutions could also choose to store part of the obligation in products/crude oil another country through a bilateral agreement or to hold part of the obligation in form of tickets. In summary, there are several possibilities to achieve 90/61 days of stocks:

• to build new storage for emergency oil stocks • to store large quantity of stocks in form of crude oil in the refineries or coastal terminals • to lease existing storage capacities from the private companies • to delegate part of the stocks to operators • to delegate part of the stocks to Central Stockholding Entities in another country/countries (bilateral agreement) • to include tickets • different combination of above possibilities

Each country should assess the best way of holding the emergency stocks whether it is the cheapest, the quickest or safest way for it. The most suitable way of stockholding depends on a numerous factors such as financing possibilities, current situation of infrastructure, number of traders, presence of domestic refinery, time targets, future projects in oil sector, etc. The manner of holding stocks is also able to be changed when conditions change. 3.6. Forward Crude Oil & Product Pricing In order to provide a cost basis for the acquisition of petroleum products to meet the stock holding requirement in each country, it is important to have a reasonable view on what future prices may be. It is impossible to know with any certainty what prices will be several years in to the future. However, a common approach to this problem is to plan based on assumptions that future product prices will be linked to each other and to the price of crude oil in a way that reflects historical trends.

Analysis of historical prices shows that producttocrude oil and productto product ratios and differentials (sometimes referred to as crack spreads) tend

Emergency Oil Stocks in the Energy Community Level 15 26 April 2011

to follow fairly consistent patterns and trends. These pricing relationships tend to be reasonably consistent over a wide range of absolute crude oil prices. This feature is particularly useful as crude oil price has proved to be particularly volatile, with a range in recent years from about US$10/bbl to over US$150/bbl.

The difficultly in predicting oil price beyond a relatively short period into the future has proved problematic to all oil industry players. This has given rise to the approach of developing oil price scenarios which sidestep this problem. This is the approach adopted for the analysis in this study.

It is important to note that there is no one correct view of where oil prices may be in the future. For this study, an oil price scenario has been developed based on US$80/bbl Brent (fob, ARA).

Market prices quotations are provided by several organisations and published in various journals. These allow historical analysis of pricing relationships. This applies to different grades of crude oil in different locations as well as to petroleum products.

Based on such historical crude oil price relationships, a forecast for Urals crude oil, delivered into the Mediterranean region, has been made that is appropriate to US$80/bbl Brent (fob, ARA). This is approximately US$78/bbl Urals, cif Mediterranean. This is deemed most appropriate for the countries covered in this study as many are close to the Mediterranean and may well process Urals crude oil in their refineries (where they have them).

Historical price analysis enables the typical range of pricing ratios and differentials to be established. The chart below demonstrates that product price ratios to crude oil are maintained in a fairly narrow band over time and a wide range of absolute oil price. This pricing analysis is based on cif Med cargo prices.

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Figure 5 Product/Crude Price Ratios

1.80 100 1.60 90

1.40 80

70 1.20 60 1.00 50 0.80 40 0.60 30

Urals, CIF Med ($/bbl) 0.40 20 price ratios Product:crude 0.20 10 0.00 0 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

LPG Naphtha Jet UL95 EN590 Gasoil 1% FO 3.5%FO Urals CIF Med $/bbl

Pricing ratios and differentials can evolve over time as a function of market, regulatory and product quality changes. However, these factors have all varied over the last 15 years and still the range of price ratios has remained fairly constant. As a consequence, the forecast used here does not deviate significantly from the recent past.

The actual pricing levels for products in each country will differ from the cif Med cargo prices, depending on the specific supply and demand position of each country. Deficit countries will tend to pay slightly more, due to the cost of importing from the Mediterranean, while surplus countries would achieve a price incountry which is typically less that the cif Med cargo price due to the need to export marginal production.

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Table 4 Assumed Product Prices Product Price / Tonne Gasoline US$ 750 Diesel US$ 710 Jet fuel US$ 740 Gas oil US$ 710 Fuel oil US$ 450 Product Basket € 477 Crude Oil € 430 Source: PDC Analysis of publicly available data 2

2 A note on data sources: all data presented in tables within this report has come from the Beneficiaries responses to Consultant’s Questionnaires and the Consultant’s analysis of that data.

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3.7. Obligation Calculation Model Construction This section aims to provide a guide to the construction of a spread sheet model for determining the required obligation under Directive 2009/119/EC. The key functions of such a model are outlined here:

• Gather for each country the following annual data from statistic agencies and from models for future dates: o Domestic crude oil production o Crude oil import o Crude export o Domestic refinery product output o Imports of petroleum products o Exports of petroleum products o Domestic consumption of petroleum products

• Tabulate the above data and calculate net import/export balance and stock changes. This will create an energy balance for the country in terms of oil and petroleum products

• The energy balances for the relevant years are then converted to tonnes of oil equivalent (toe). Then both methods of determining the stock holding obligation (i.e. based on imports and domestic consumption) are applied for each year as set out in Section 3.2

• The results for both the import and domestic consumption obligation are then compared. The obligation which is the greater amount in toe terms is the obligation which must be met

• The obligation is then converted from toe back into tonnes.

• The obligation in tonnes is then converted into a volume in cubic meters using the relevant products density

• This volume is then rounded up to allow for tank size construction.

• The capital cost of the tankage is then determined by multiplying the volume of required tankage by the estimated cost per cubic meter

• The cost of the physical stocks is then determined by multiplying the obligation in tonnes for each product by the relevant price.

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4. The Role of the Central Stockholding Agency EU Member States have taken different approaches to managing strategic stocks with some setting up Central Stockholding Agencies (CSE), others obligating operating companies (referred to as “economic operators” in Directive 2009/119/EC) to hold oil stocks and some having the country’s stock holding obligation split between operating companies and a CSE. All three approaches can satisfy the requirements set out in Directive 2009/119/EC.

However a CSE is structured, whether as a government department or as a corporate entity, CSE’s should satisfy the following criteria:

• Be a nonprofit entity • Formed within the Member State or other Member State • Have the specific purpose of managing the Member State’s emergency and specific oil stocks

Where stocks are held by companies as well as a CSE, it is usual for the CSE to also be responsible for monitoring & reporting of oil stocks. It should be noted that whilst the CSE may audit the holdings of economic operators, Directive 2009/119/EC also requires that third parties appointed by the commission may audit oil stocks held by both the CSE and the company. Where the country has elected not to form a CSE and obligates companies to hold emergency stocks, there should be one sole body for collating and reporting stockholding levels. 4.1. CSE Formation and Constitution Where a country has elected to form a CSE, there is considerable flexibility in how the CSE can be formed and how it can operate. Two contrasting examples from countries that have recently joined the EU are given below in Sections 4.1.1 (Hungary) and 0 (Czech Republic). In Hungary, the CSE is an independent company owned by oil and petroleum companies which is constituted to be nonprofit making and holds the oil stocks obligations at leastcost to the member companies. In the Czech Republic the central government controls and funds emergency oil stocks.

4.1.1. Hungary Hungary is one of the first of the former Eastern Bloc countries to join the European Union and was required to update its emergency oil stock holding policies. In 1991, with the liberalisation of crude oil and petroleum products trading, there was no longer a statecontrolled apparatus for ensuring adequate emergency oil stocks. In order to guarantee the provision of these significant stocks, the Hungarian Petroleum Association was formed to include the state oil company MOL and also the Hungarian affiliates of the international oil companies operating in Hungary at that time.

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In 1993, the Hungarian Parliament adopted Act IL/1993 which laid out the requirements for stock piling of oil products. In order to stockpile effectively, the 14 oil companies established the Association of Crude Oil and Oil Products Stockpiling (KKKSz). Now known as HUSA, it is an independent organisation but its actions are controlled as laid down in the Act of 1993 and so acts to ensure Hungary’s compliance with storage requirements whilst allowing industry efficiently to stockpile the required quantities.

HUSA has the following tasks:

• Create strategic stocks equal to 90 days of net imports • Ensure technical conditions for safe storage • Ensure lowest cost operation of the stock piling system • Ensure equal burden on all market players

HUSA has the following obligations in terms of what form the emergency oil stocks can take:

• Crude oil • Motor Gasoline • Diesel Fuel • Maximum 10% of stocks can be heavy fuel oil • 90% of stocks must be crude oil and Motor Gasoline / Diesel

In the 1993 Act, it was realised that to build stocks and storage capacity equivalent to 90 days’ net import levels would be impractical in a short time frame. Hence a schedule of stock building was required such that 20 days’ of net import levels was required by 31 December 1993, adding 10 days by the end of each subsequent year so that by 31 December 1998 there would be the equivalent of 90 day net import levels as emergency oil stocks,.

The emergency stocks were created in two ways:

Petroleum Products:

• Purchase through bidding • Toll processing in domestic refinery

Crude:

• Purchase through bidding

The storage of stocks by HUSA is carried out by contracting partners which can be divided into 3 categories:

Emergency Oil Stocks in the Energy Community Level 21 26 April 2011

• Independent market players • 100% HUSA owned storage companies • Partially HUSA owned storage companies

All facilities that hold strategic stocks must have minimum loading and unloading capacities to allow sufficient flexibility for storage:

• Unloading Rail: minimum 2000 m 3/day • Loading Rail: minimum 2000 m 3/day Road: 1000 m 3/day

The financing of the stocks was initially done through a series of tendered, rolling one year loan facilities. Up until 2001, these loans were guaranteed by the government but from then the stocks acted as security for financing needs.

Table 5 HUSA Cash Flows Expenses Storage and Cycling costs 70% Financing costs 25% Operational costs 5%

Income Members contribution 100% Dividends from KKKSz companies Potential Source: IEA/China Seminar on Oil Stocks and Emergency Response, Beijing 910 December, 2002 Session 4 – IEA Experiences in Building Oil Stockholding Facilities Stockpiling Practice in Hungary

4.1.2. Czech Republic In the Czech Republic the holding of emergency oil stocks is carried out by the central government. The breakup of Czechoslovakia in 1993 meant that Czech and Slovak reserves were not located where they best served the needs of the two now separate countries. In terms of energy policy and particularly oil stocks, the Czech Republic had two goals: joining the IEA which occurred in February 2001 and achieving EU membership.

The emergency oil stocks are owned by the government and financed from the central government budget. To manage and hold these stocks, the Administration of State Material Reserves (ASMR) was created. ASMR has

Emergency Oil Stocks in the Energy Community Level 22 26 April 2011

the responsibility of monitoring and reporting the condition of emergency oil stocks.

There are three main pieces of Czech legislation pertaining to oil stocks:

• Act 97/1993 on the ASMR • Act 189/1999 oil stocks and procedures • Decree 194/2000 Further detail on oil stocks

Act 189/1999 sets out what constitutes a supply interruption which would trigger release of emergency oil stocks by the ASMR and actions and powers which the ASMR may deploy in a supply interruption.

These measures can be summarised as:

• Motoring speed and vehicle restrictions • Aviation restrictions • Retailing restrictions • Rationing • Temporary loans of stocks to relieve localised problems

The ASMR also has powers for enforcement in times of supply disruption. ASMR reports to the National Emergency Strategy Organisation (NESO) and agrees basic documentation, approval of procedures and relevant training.

The Czech emergency oil stocks are required to be a maximum of 60% crude oil and the rest in products that conform to EU categories. A maximum of 17% may be held abroad under a ticketing arrangement but this requires government approval.

4.2. CSE Operation CSE’s can operate in a variety of ways in terms of ownership, operation and maintenance of emergency stocks and storage tankage. Under Directive 2009/119/EC, tankage maybe:

• Owned outright by the CSE • Owned in part by the CSE (for example joint facilities with companies to reduce costs by increasing scale) • Leased from commercial providers • Owned by CSE’s or companies in other countries • Operated by the CSE or third party contractors

Emergency stocks maybe: • Owned outright by the CSE

Emergency Oil Stocks in the Energy Community Level 23 26 April 2011

• Held by delegate companies (both within country and in other Member States) • Held via ticketing arrangements with the option to buy emergency oil stocks when required (often held with international oil companies).

4.3. CSE Financing CSEs have a requirement for both initial capital expenditure for the purchasing of stocks and construction of facilities, and ongoing operation expenditure. Options for the Beneficiaries are discussed within each country section of this report but a brief overview of the possible options are provided here with some key points about the two approaches:

Central Government Funding: • Easy to administer • Usually low capital costs • Consumers do not contribute proportionally to their consumption • Often shields vulnerable consumers such as the energy poor from additional costs

Consumer levy on fuel by unit • Harder to administer • Can have higher capital costs such unless there are government guarantees • Proportional contribution by consumers based on consumption • Public are aware of the cost of emergency oil stocks

In terms of financing the initial cost of the storage, the host government often provides a soft loan or loan guarantee for the capital costs in order to establish the emergency stocks and then further financing is secured against the emergency stocks and the facilities (Germany and Hungary are two EU examples of this approach).

Emergency Oil Stocks in the Energy Community Level 24 26 April 2011

5. Albania Albania’s geological oil reserves are mostly nonconventional (e.g. heavy, asphaltresinous and high sulphur) and are estimated at 450 million bbl. Crude oil is produced from seven oil fields in southern Albania. Crude oil production in the last few years amounted to almost twice domestic crude needs. Bankers Petroleum Albania Ltd is currently redeveloping the Patos Marinza oil field through individual well leases from Albpetrol. The company plans phased takeover of Albpetrol areas to allow for an area cleanup and establish full consolidation of existing operations areas under Bankers’ management. Shut down of Albpetrol’s facilities and flow lines was scheduled for end of 2010, and complete field takeover and cleanup by 2013.

There are two refineries in operation in Albania both belonging to the company ARMO (Albanian Refining and Marketing of Oil), a former state owned company which was privatised in 2008 with the shareholders being Amra Oil Sha and a consortium of Refinery Associates of Texas, Anika Enterprises & Mercuria Energy Group that holds 85% of the shares. The remaining 15% of shares are owned by the Albanian Government, represented by the Ministry of Economy Trade and Energy. Oil products from the refineries supply about onethird of the domestic market. Recent increases in demand for light products cannot be met by the domestic refineries. Imported motor fuels are cheaper and of better quality than those produced in the domestic refineries and hence most of the petroleum products are imported from Greece and Italy.

Significant foreign investment is being made as the potential for increased recovery in existing oil fields is being realised. This indicates a potential for additional output which should benefit the oil refineries where further investments are also planned. 5.1. Crude Oil and Oil Product Supply and Demand The following figures provide a summary of the current and forecast position in Albania based on the methodology outlined in Section 3.1.

Emergency Oil Stocks in the Energy Community Level 25 26 April 2011

Figure 6 Crude Oil Production, Albania, 2007-2020

2.500

2.000

1.500

x 1 0001x t 1.000

500

0 2007. 2008. 2009. 2010. 2015. 2020.

Figure 7 Crude Oil Import and Export, Albania, 2007-2020

200

0 2007. 2008. 2009. 2010. 2015. 2020. 200

400

600 x 1 000t 1 x 800

1.000

1.200

1.400 Import Export

Emergency Oil Stocks in the Energy Community Level 26 26 April 2011

Figure 8 Net Production of Petroleum Products, Albania, 2007-2020

1.000

900 800

700 600

500

x0001 t 400

300 200 100 0 2007. 2008. 2009. 2010. 2015. 2020.

Naphtha Gas/diesel oil Residual fuel oil Petrol coke Bitumen

Figure 9 Petroleum Product Imports, Albania, 2007-2020

800

700

600

500

400

x1000 t 300

200

100

0 2007. 2008. 2009. 2010. 2015. 2020. LPG Motor gasoline Kerosene and jet fuel Gas/diesel oil Residual fuel oil Petrol coke Bitumen Lubricants Other

Emergency Oil Stocks in the Energy Community Level 27 26 April 2011

Figure 10 Petroleum Product Exports, Albania, 2007-2020

200

180

160

140

120

100

x 1000x t 80

0 2007. 2008. 2009. 2010. 2015. 2020. Naphtha Residual fuel oil Petrol coke Bitumen

Figure 11 Domestic Consumption of Petroleum Products, Albania, 2007-2020

1.600

1.400

1.200

1.000

800

x1000 t 600

400

200

0 2007. 2008. 2009. 2010. 2015. 2020. LPG Motor gasoline Kerosene and jet fuel Gas/diesel oil Residual fuel oil Petrol coke Bitumen Lubricants Other

Emergency Oil Stocks in the Energy Community Level 28 26 April 2011

Figure 12 Oil Product Supply and Demand, Albania, 2007-2020

1.600

1.400

1.200

1.000

800

600

x 1000 t 400

200

0 Production Import Export Consumption 200

400 2007 2008 2009 2010 2015 2020

5.2. Emergency Oil Stock Obligations The following tables give the Consultant’s calculated emergency oil stocks obligation for based on the methodology given in Section 3.2.

Table 6 Crude Oil Equivalent of Imports of Petroleum Products, Albania, 2009-2020 × 1 000 toe 2009 2010 2015 2020 Crude oil 208 186 1,222 614 LPG 101 109 123 145 Motor gasoline 86 99 138 175 Kerosene and jet fuel 10 15 19 24 Gas/diesel oil 357 398 376 437 Residual fuel oil 33 61 25 63 Petrol coke 32 40 1 22 Bitumen 44 58 28 76 Lubricants 9 10 14 19 Other 0 2 5 9 Total 463 607 -599 33 Daily net imports 1.3 1.7 -1.6 0.1

Emergency Oil Stocks in the Energy Community Level 29 26 April 2011

Table 7 90 Days Net Imports of Crude Oil and Petroleum Products, Albania, 2009-2020 × 1 000 toe 2009 2010 2015 2020 Crude oil 51 46 301 151 LPG 25 27 30 36 Motor gasoline 21 24 34 43 Kerosene and jet fuel 2 4 5 6 Gas/diesel oil 88 98 93 108 Residual fuel oil 8 15 6 15 Petrol coke 8 10 0 5 Bitumen 11 14 7 19 Lubricants 2 2 4 5 Other 0 0 1 2 Total 114 150 -148 8

Table 8 Crude Oil Equivalent of Inland Consumption, Albania, 2009-2020 × 1 000 toe 2009 2010 2015 20 20 Motor gasoline 97 111 156 197 Kerosene and jet fuel 11 17 22 27 Gas/diesel oil 487 535 632 768 Residual fuel oil 124 160 190 218 Total 720 824 1,000 1,209 Daily inland consumption 2.0 2.3 2.7 3.3

Table 9 61 Days of Average Daily Inland Consumption, Albania, 2009-2020 × 1 000 toe 2009 2010 2015 2020 Motor gasoline 16 19 26 33 Kerosene and jet fuel 2 3 4 4 Gas/diesel oil 81 89 106 128 Residual fuel oil 21 27 32 36 Total 120 138 167 202

As the quantities of oil and petroleum products (in toe) calculated on basis of 61 days of average daily inland consumption are greater than quantities calculated on basis of 90 days of net imports after 2010, Albania should base its stockholding obligation on average daily inland consumption.

Emergency Oil Stocks in the Energy Community Level 30 26 April 2011

Table 10 Stockholding Obligation According to Average Daily Inland Consumption, Albania, 2010-2021 × 1 000 toe 2010 2011 2016 2021 Petroleum products 40 46 56 67 Crude oil 80 92 111 135 Total 120 138 167 202 Days of net imports 61 61 61 61

Table 11 Proposed Composition of Compulsory Stocks, Albania, 2010-2021 × 1 000 t 2010 2011 2016 2021 Motor gasoline 12 14 19 24 Kerosene and jet fuel 1 2 3 3 Gas/diesel oil 60 66 78 94 Residual fuel oil 15 20 23 27 Crude oil 28 32 38 46 Total 116 132 161 194

The proposed composition of compulsory stocks provides the basis for the required volume of storage to 2021 as shown in Table 12.

Table 12 Required Volume of Storage of Compulsory Stocks, Albania, 2010-2021 m3 2010 2011 2016 2021 Motor gasoline 15.806 18.217 25.492 32.179 Kerosene and jet fuel 1.834 2.709 3.522 4.335 Gas/diesel oil 71.126 78.086 92.268 112.052 Residual fuel oil 17.104 22.077 26.175 29.959 Crude oil 33.042 37.815 45.918 55.514 Total 138.912 158.905 193.375 234.039

Emergency Oil Stocks in the Energy Community Level 31 26 April 2011

5.3. Current Oil Infrastructure This section provides the Consultant’s understanding of the current oil infrastructure in Albania.

Figure 13 Oil Infrastructure, Albania

Albania has four refineries, two of which are still in operation. The Ballsh and Fier refineries process heavy domestic crude oil (835ºAPI). The Ballsh refinery (1 Mt/y capacity) was commissioned in 1978 using Chinese technology and initially had the capacity to produce various oil products (including motor fuels) however this technology is now outdated. Its design only allows production of products with high sulphur content (48%) and operates at only about 30% of its nameplate capacity. Investments for improving infrastructure and quality of products are ongoing.

Finished products are shipped from Ballsh Refinery either by train or truck to the wholesale market. The road connection between the Fier and Ballsh refineries is not in good condition and needs improving and rerouting (e.g. to bypass the town of Ballsh). Roads are already under construction that should facilitate more efficient commercial transportation of products.

Emergency Oil Stocks in the Energy Community Level 32 26 April 2011

The Fier refinery (0.5 Mt/y) was built using Russian technology which is now outdated. The refinery processes domestic crude oil and produces mostly light and heavy fuel oil for thermal power plant Fier and smaller quantities of bitumen and naphtha with high sulphur content. It operates at about 1020% of installed capacity.

Two crude oil pipelines currently exist, one which connecting the ARMO Vlorë oil terminal with the refineries of Fier and Ballsh. Both pipelines are out of operation due to poor condition. In total, the oil pipeline network is 188 km long and the capacity is 2.5 million tons per year if operational and links the two operating refineries.

Table 13 Crude Oil Pipelines, Albania Route Length (km) Kuçovë Zharrëz 24.0 Zharrëz Fier 14.7 Gorisht Ballsh 17.6 Ballsh – KPTHN (Refinery) 1.2 Zharrëz – Visokë – Ballsh – KPTHN (Refinery) 25.5 Vlorë Ballsh 70.0 Vlorë Fier (Refinery) 35.0 Total 188.0

There are four ports in Albania. The port of Durrës, located in the Bay of Durrës, is the largest port in Albania and an important hub for the international market and product import into. Its operational infrastructure consists of 11 quay aprons with a depth ranging from 7.5 m11.7m. The port is accessible for ships up to 20,000 dwt. To the north of city of Durrës is the newly built Porto Romano oil terminal which can receive cargo ships with liquid gas capacity of 9,000 tonnes and oil cargo ships with capacity of 20,000 tonnes. The sea depth of the tanker berth is 10.5m. Discharge capacity of the equipment is 9,000 t of gasoline in 24 hours and 4,000 t per LPG in 24 hours. The terminal has been operated by the concessionary company Romano Port since 2009.

At Vlora1 port in Vlorë Bay, there is an ARMO ship unloading platform, however this only accessible for small cargo vessels. The anchorage depth is 20.1 21.3m and sea depth of tanker berth is 8.5m. The export line from the ARMO tank yard to the platform is 8" and has recently been rehabilitated. In addition, a 10" line runs in parallel, which is used for water purging after unloading operations. ARMO operates storage facilities for import/export of petroleum products with a ship loading platform (about 4 km from the shoreline). North of city of Vlorë, as part of the Vlorë coastal hydrocarbon terminal is a new 600m long jetty with water depth of about 8.5m which can

Emergency Oil Stocks in the Energy Community Level 33 26 April 2011

accommodate two vessels. Unloading capacities are 19,000 t of gasoil and gasoline in 24 hours and 1,500 t of LPG in 24 hours. The terminal has been operated by the private company Petrolifera ItaloRumena since 2009.

The port of Shëngjin is located at north of Albanian coast and handles among other cargo liquid bulks, specifically oils. Anchorage depth is between 20.1 and 21.3m.

The port of Sarandë is located at southern Albanian coast. It has two areas: Sarandë for general cargo and ferries, and Limioni bay, for fishing and other smaller cargoes.

The current total storage capacity in Albania is about 732,000 m 3.

Table 14 Crude Oil and Intermediate Products Storage Capacities of ARMO, Albania Product Location Capacity (m 3) Ballsh Refinery 42,500* Crude oil Vlora1 port 13,000 Intermediate products Ballsh Refinery 80,600* Total 136,100 *Calculated based on data expressed in tonnes

Table 15 Petroleum Products Storage Capacities, Albania Location Product Capacity (m 3) Ballsh refinery Petroleum products 45,942* Port of Shëngjin Petroleum products 39,450 Port of Durres Petroleum products 31,000 Fuels and 69,000 Porto Romano oil terminal combustion fuels LPG 10,000 Vlora1 port Petroleum products 13,000 ARMO terminal, Vlora Gasoline and gasoil 30,000 Petrolifera oil terminal, Vlora Petroleum products 64,000 Fuel oil 281,216 Different wholesale companies LPG 13,057 Total 596,665 *Calculated based on data expressed in tonnes

In the Vlora1 port, there is 13,000 m 3 of capacity for crude oil under construction. There are 147,000 m 3 of storage for fuel and combustion fuels, 18,600 m 3 for LPG and 10,000 m 3 for bitumen under construction in Porto Romano terminal. This new capacity will increase existing storage by 188,600 m3.

Emergency Oil Stocks in the Energy Community Level 34 26 April 2011

5.4. Emergency Oil Stock Current Situation In Albania refineries and wholesale companies are obliged to keep emergency stocks of oil and oil products. The number of companies that are required to hold stocks is increasing each year, due to the liberalisation of the licensing process. In 2010 there were about 90 wholesale companies that had the obligation for holding emergency oil stocks. The growth in the number of companies is shown in Figure 14.

Figure 14 Wholesale Companies Obliged to Hold Emergency Oil Stocks, Albania 2001- 2009

0 2001 2002 2003 2004 2005 2006 2007 2008 2009

LPG Motor gasoline Gas oil Kerosene and jet fuel Light fuel oil (solar)

Based on the orders of the Minister responsible for the petroleum sector prepared for each wholesale company, the volume of emergency oil stocks for the year 2010 was 106,467 tons of oil and petroleum products.

Table 16 Emergency Oil Stocks, Albania, 2010 Product Quantity (t) LPG 16,458 Motor gasoline 9,979 Gas oil 69,178 Kerosene and jet fuel 2,401 Light fuel oil (Solar) 8,450 Total 106,467

Emergency Oil Stocks in the Energy Community Level 35 26 April 2011

5.5. Additional required stockholding capacities Albania currently has 106,467 tonnes of petroleum products for emergency stocks. This quantity almost satisfies the stockholding obligation under Directive 2009/119/EC. In order to keep holding enough stocks regarding the increase of consumption forecast, Albania should increase its stockholding capacities by about 100,000 m 3 by 2021 (Table 12). 5.6. Legal Review The main institution responsible for the management of the stocks is the Ministry of Economy, Trade and Energy. The responsible unit for the petroleum activity and the Central Technical Inspectorate audit quantities of emergency oil stocks. The rules and administrative procedures are based on the “Technical regulation for maintenance of oil byproducts in storages where the emergency stocks for oil, gas and their byproducts are held, and the manner of control organisation for evaluation of the quality standards of by products in these storages”. This Regulation is approved by the Minister responsible for the petroleum sector.

Law No. 8450 of 24 February 1999, “On the refining, transportation and trading of oil, gas and their byproducts” and its amendment (Law 9574, dated 3.7.2006) determines the holding of the emergency oil stocks by oil refineries and wholesale companies of oil, natural gas and their derivatives. This is equivalent to 30 days average sale calculated based on actual data and results of the activity of the previous year.

Oil refineries, can meet up to 50% of their emergency oil stocks obligation in the form of crude oil. They can keep the stocks in their own tanks or in tanks of the oil production companies with whom they have a supply contracts. Wholesale companies can keep the emergency oil stocks in their own tanks or tankage rented from another company.

Law No. 9218, dated 8 April 2004 (an amendment to Law No. 8450 "For the processing, transportation and marketing of oil, gas and derivatives”) increased the obligation to 60 days average sales, starting from 2007 and achieving 90 days of the average sale in 2010. Article 25 of Law Nr. 9218 imposes a penalty of up to 50% of the product value for stock that is lacking from the defined requirement.

Decree No. 808, dated 5 November 2004 “On maintaining and management of emergency stock for oil, gas and their products” commits refineries, coastal installations and wholesale companies to hold emergency stocks of oil, gas and their byproducts. The emergency stocks are to be held for the following categories:

Emergency Oil Stocks in the Energy Community Level 36 26 April 2011

• Category 0 crude oil • Category I liquid petroleum gas • Category II motor gasoline, fuel gasoline • Category III diesel oil, kerosene and jet fuel • Category IV – light fuel oil

The responsible unit for the petroleum activity defines the quantity of emergency stock for these products, held by the refinery, coastal installation and wholesale company, calculated over the sales of preceding calendar year. The quantity of emergency stock for the next year is defined by order of minister responsible for hydrocarbons sector, at the end of each year.

Based on the Decision No. 914, dated 29 December 2007 (a modification to Decision No. 808 of the Council of Ministers "On the maintenance and reserve security management for petroleum, gas and their derivatives") the amount of the security reserve, to be held by entities that are obliged to keep the safety stock is:

• No less than 30 per cent of the technically certified tanks of the entity • Not more than 40 per cent of the technically certified tanks of parties with whom the entity has an agreement with

5.7. Financial Aspects of Oil Stocks Emergency stocks of petroleum products are held by energy companies. The system requires that they include their expenses for emergency stocks in the retail price of their product. The use of storage capacities of trade companies might also affect business opportunities and be the reason that some companies do not carry out the imposed obligation so compliance is problematic.

To get better control over emergency stocks and transparency of the stockholding system, the Consultant proposes a more rigorous approach from the government for reporting and auditing of emergency oil stocks and more active role in fining noncompliant companies. For storing of emergency stocks Albania should consider all possibilities in enabling usage of existing storage whether through modernisation of storage currently out of operation or through lease of adequate storage capacities from private companies. The rest of the required capacities should be built in adequate locations.

Emergency Oil Stocks in the Energy Community Level 37 26 April 2011

Table 17 Required Volume and Corresponding Investments in Storage, Albania, 2010- 2021 Construction Modernisation m3 € m3 € Oil products 41,000 9,840,000 140,000 13,440,000 Crude oil 56,000 11,200,000 0 0 Total 97,000 21,040,000 140,000 13,440,000

In accordance with the calculated total obligation up to 2021, Albania needs to invest in the purchase of petroleum products and crude oil an amount of €91.9 million.

Table 18 Needed Investment in Crude Oil and Oil Products Purchase, Albania, 2010- 2020 Tonnes € Oil products 148.216 71.989.771 Crude oil 46.243 19.872.985 Total 194,459 91,862,756

The requirements for modernisation of existing storage capacity (Table 19), construction of new facilities (Table 20) and the formation or acquisition of stocks were defined for the purpose of calculating the investment by importers and producers of petroleum products for each litre of gasoline, gas oil, residual fuel oil and LPG sold on the Albanian market. The proposed scenario results in costs that include investments in storage facilities, procurement of petroleum products and crude oil inventories, renewal of stocks as well as operational costs of the entire system (Table 21).

Table 19 Storage Tank Modernisation Plan, Albania, 2010-2020 m3 2012 2014 2016 2018 2020 Oil products 140,000 0 0 0 0 Crude oil 0 0 0 0 0

Table 20 Storage Tank Construction Plan, Albania, 2010-2020

m3 2012 2014 2016 2018 2020 Oil products 0 0 20,000 21,000 0 Crude oil 0 30,000 26,000 0 0

Emergency Oil Stocks in the Energy Community Level 38 26 April 2011

Table 21 Planned Costs (Storage Capacities, Crude Oil and Products Procurement and Operational Costs), Albania, 2010-2020 × 1 000 € 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Oil products 0 69,967 2,128 2,128 2,128 15,003 2,432 15,951 2,751 2,751 Crude oil 0 0 0 17,195 456 15,359 851 851 851 851 Total 0 69,967 2,128 19,323 2,584 30,362 3,283 16,802 3,602 3,602

Figure 15 Proposed Build-up of Emergency Stocks Formation in Albania, 2012-2020

250 Crude oil Oil products

200

150

x 1 000 t 000 1 x 100

0 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

With the defined scenario of the stocks formation and forecast consumption of petroleum products in Albania, the average cost to the importers and manufacturers of petroleum products per each litre of gasoline, gas oil, residual fuel oil and LPG placed on the market would amount to 0.013 €/l. Such fee ensures the formation of 61day supplies of oil and petroleum products by the year 2020 in Albania.

5.8. Organizational Aspects of the Stockholding System The body responsible for the maintenance and auditing of stocks is the Ministry of Economy, Trade and Energy. Due to problems in the current system of stockholding of imposing the obligation of holding emergency stocks to the companies the formation of a legally empowered institution would provide a transparent and efficient system which would satisfy the needs of security supply. This institution may be an independent agency (CSE) or any other similar body.

Where a country sets up a CSE, it shall take the form of a body or service without profit objective and acting in the general interest and shall not be considered to be an economic operator. The main purpose of the CSE shall be to acquire, maintain and sell oil stocks.

Emergency Oil Stocks in the Energy Community Level 39 26 April 2011

The regulator should be formed by amendments of the Law and it should take over all duties regarding emergency stocks including auditing purchase, sales, management and reporting and disclosure of emergency stock holdings. Given the current situation of noncompliance with emergency stock holding requirements in Albania, there should be a grace period for investment in storage capacity and build up of stocks. 5.9. Intervention in Case of Supply Disruption The procedures for usage of emergency stocks in an emergency situation are provided in Decree No. 808 dated 5 November 2004. An emergency situation is triggered when:

• the petroleum market is characterized by a significant reduction of the supply of oil, gas and their products • by a material rise in the price of imports of oil, gas and their products compared to prices of the previous year • or when it is expected that these factors are likely to arise

In case of a crisis the Prime Minister will proclaim a state of emergency for oil, oil products or gas, according to the proposal of the minister responsible for the hydrocarbons sector. The Committee of Crisis Management defines emergency stock usage and its market price.

The Committee of Crisis Management prepares and approves the security measures to deal with the shortages. These measures include:

• introducing a maximum speed for motor vehicles • limiting the use of certain vehicle groups • temporary prohibition of export of oil, gas and their products

5.10. Required Legislative Changes

Even though Albania has a legislative framework based on the EU requirements on oil stocks it has to include recent changes included in the Directive 2009/119/EC in its legal acts.

These changes involve:

• The method of calculation of the obligatory oil stocks Article 3 ; Annexes I, II and III • There is no need to classify products into Categories I, II, III etc. as the composition of stocks is regulated in Article 9 of the Directive 2009/119/EC

Emergency Oil Stocks in the Energy Community Level 40 26 April 2011

• The quantities of emergency stocks can be stored in form of crude oil in larger share than 40% Article 9 of the Directive 2009/119/EC • There are possibilities to for companies required to hold stocks to delegate their obligation Article 8 of the Directive 2009/119/EC for details • There is an obligation to submit statistical summaries of the level of emergency stocks on a regular bases for each month Article 12 and Annex IV of the Directive 2009/119/EC • There is an obligation to submit statistical summaries of the level of commercial stocks on a regular basis for each month Article 14 of the Directive 2009/119/EC for details • Biofuels can be taken into account when calculating stockholding obligation Article 16 of the Directive 2009/119/EC • The procedure in case of supply disruptions is to be refined to include the Commission and IEA in the process Article 20 of the Directive 2009/119/EC and should include a revision to price increases triggering a release of stocks as opposed to physical interruption.

5.11. Road Map Albania is fairly advanced along the road to complying with Directive 2009/119/EC. However, legislative changes are still required to comply with the Directive and to provide enforcement of company obligations. The Consultant believes an independent regulator should be formed to calculate the required emergency stock holding obligations, oversee reporting, auditing and publication of the emergency oil stocks and powers to levy fines for the noncompliance with emergency stock holding requirements. A possible timeline as envisaged by the Consultants is given in below. It should be noted that as the government is not envisaged as directly holding stocks, a looser engineering study and construction phase is given as companies should be allowed maximum flexibility for capital investment.

Having met with Albanian representatives, it has become clear that the Albanian method of requiring industry to hold stocks has not been successful. Albania is now considering moving towards a CSE and having one central body control emergency stock holdings. This is a major undertaking by Albania and will require significant reworking of legislation and legal frameworks. The Consultant is presenting the road map for the current situation within Albania and not the proposed move to a CSE. Once Albania has started to move in a more certain direction, the Consultant recommends that Albania updates the Energy Community with a new road map. The Consultant believes that is Albania were to continue with the current framework and plans laid out in this section and in Figure 16, then Albania should be compliant by 2016. However, should Albania move towards a CSE system for holding stocks, this may take longer. In either case, the Consultant believes that Albania has a good chance of being compliant with Directive

Emergency Oil Stocks in the Energy Community Level 41 26 April 2011

2009/119/EC by 2016 and certainly should be compliant by the 2020 time frame of this study.

Emergency Oil Stocks in the Energy Community Level 42 26 April 2011

Figure 16 Gantt Diagram for Road Map, Albania

Emergency Oil Stocks in the Energy Community Level 43 26 April 2011

6. Bosnia and Herzegovina Bosnia and Herzegovina (BiH) is completely dependent on imported crude oil but it has petroleum products production in two refineries. The available production and refining capacities of both refinery plants, Bosanski Brod Oil Refinery and Modriča Lube Refinery, are relatively high given the size of the BiH market. 6.1. Crude Oil and Oil Product Supply and Demand The following figures provide a summary of the current and forecast position in BiH based on the methodology outlined in Section 3.1.

Figure 17 Crude Oil Imports, BiH, 2007-2020

4.500

4.000

3.500

3.000

2.500

2.000 x 1 000 t 000 1 x

1.500

1.000

500

0 2007 2008 2009 2010 2015 2020

Emergency Oil Stocks in the Energy Community Level 44 26 April 2011

Figure 18 Net Production of Petroleum Products, BiH, 2007-2020

4.000

3.500

3.000

2.500

2.000 x 1 000 t 000 1 x 1.500

1.000

500

0 2007 2008 2009 2010 2015 2020 LPG Motor gasoline Naphtha Gas/diesel oil

Residual fuel oil Bitumen Lubricants Other

Figure 19 Petroleum Product Imports, BiH, 2007-2020

1.600

1.400

1.200

1.000

800 x 1 000 t 000 1 x 600

400

200

0 2007 2008 2009 2010 2015 2020 LPG Motor gasoline Kerosene and jet fuel Gas/diesel oil Residual fuel oil Petrol coke Bitumen Lubricants Other

Emergency Oil Stocks in the Energy Community Level 45 26 April 2011

Figure 20 Petroleum Product Exports, BiH, 2007-2020

3.000

2.500

2.000

1.500 x 1 000 t 000 1 x

1.000

500

0 2007 2008 2009 2010 2015 2020

LPG Motor gasoline Gas/diesel oil Residual fuel oil Petrol coke Bitumen Lubricants Other

Figure 21 Domestic Consumption of Petroleum Products, BiH, 2007-2020

2.000

1.800

1.600

1.400

1.200

1.000

x 1 000 t 000 1 x 800

600

400

200

0 2007 2008 2009 2010 2015 2020 LPG Motor gasoline Kerosene and jet fuel Naphtha Gas/diesel oil Residual fuel oil Petrol coke Bitumen Lubricants Other

Emergency Oil Stocks in the Energy Community Level 46 26 April 2011

Figure 22 Oil Product Supply and Demand, BiH, 2007-2020

4.000

3.000

2.000

1.000

x 1 0001x t 0 Production Imports Exports Consumption 1.000

2.000

3.000 2007 2008 2009 2010 2015 2020

6.2. Emergency Oil Stock Obligation The following tables give the Consultants calculated emergency oil stocks obligation for BiH based on the methodology given in Section 3.2.

Table 22 Crude Oil Equivalent of Imports of Petroleum Products, BiH, 2009-2020

× 1 000 toe 2009 2010 2015 2020 Crude oil 1,022 1,104 3,101 3,744 LPG 13 7 152 187 Motor gasoline 212 155 453 586 Kerosene and jet fuel 2 2 2 3 Gas/diesel oil 549 566 251 349 Residual fuel oil 122 149 276 368 Petrol coke 39 36 32 28 Bitumen 16 31 224 292 Lubricants 4 6 58 79 Other 17 11 33 49 Total 1,679 1,659 1,688 1,866 Daily net imports 4.6 4.5 4. 6 5.1

Emergency Oil Stocks in the Energy Community Level 47 26 April 2011

Table 23 90 Days of Daily Net Imports of Crude Oil and Petroleum Products, BiH, 2009- 2020 × 1 000 toe 2009 2010 2015 2020 Crude oil 252 272 765 923 LPG 3 2 38 46 Motor gasoline 52 38 112 144 Kerosene and jet fuel 0 1 1 1 Gas/diesel oil 135 140 62 86 Residual fuel oil 30 37 68 91 Petrol coke 10 9 8 7 Bitumen 4 8 55 72 Lubricants 1 2 14 19 Other 4 3 8 12 Total 414 409 416 460

Table 24 Crude Oil Equivalent of Inland Consumption, BiH, 2009-2020 × 1 000 toe 2009 2010 2015 2020 Motor gasoline 365 360 378 413 Kerosene and jet fuel 2 2 2 4 Gas/diesel oil 1,018 1,120 1,175 1,367 Residual fuel oil 146 140 115 101 Total 1,531 1,622 1,670 1,884 Daily inland consumption 4. 2 4.4 4.6 5.2

Table 25 61 Days of Average Daily Inland Consumption, BiH, 2009-2020 × 1 000 toe 2009 2010 2015 2020 Motor gasoline 61 60 63 69 Kerosene and jet fuel 0 0 0 1 Gas/diesel oil 170 187 196 228 Residual fuel oil 24 23 19 17 Total 256 271 279 315

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Table 26 Stockholding Obligation According to Average Daily Net Imports, BiH, 2010- 2021 × 1 000 toe 2010 2011 2016 2021 Petroleum products 138 136 139 153 Crude oil 276 273 278 307 Total 414 409 416 460 Days of net imports 90 90 90 90

The proposed composition of compulsory stocks is based on current crude oil and petroleum products storage capacities and provides the basis for the required volume of storage to 2021 as shown in Table 28.

Table 27 Proposed Composition of Compulsory Stocks, BiH, 2010-2021 × 1 000 t 2010 2011 2016 2021 Motor gasoline 72 67 69 74 Kerosene and jet fuel 0.4 0.4 0.4 0.6 Gas/diesel oil 202 207 215 245 Residual fuel oil 29 26 21 18 Crude oil 95 94 95 105 Total 398 394 401 443

On the basis of proposed composition of compulsory stocks, the required storage capacity until 2021 is shown below.

Table 28 Required Volume of Storage for Compulsory Stocks, BiH, 2010-2021 m3 2010 2011 2016 2021 Motor gasoline 96,387 88,739 92,111 98,566 Kerosene and jet fuel 526 584 577 848 Gas/diesel oil 240,267 246,410 255,603 291,390 Residual fuel oil 32,638 29,164 23,656 20,282 Crude oil 113,881 112,522 114,527 126,571 Total 483,700 477,419 486,473 537,658

6.3. Current Oil Infrastructure The current refining capacities are greater than the market requirements of BiH. The refinery has two plants with a total capacity of processing 4,320,000 tons of oil annually. The older of the two plants started operation in 1968 with a capacity of 2 million tons a year, but currently its effective capacity is 1,320,000 tons a year. The new oil plant was designed for an annual output of 3 million tons. The construction of the new oil refining line was completed and put in trial operation in 1991, but because of the Balkans conflict, the plant

Emergency Oil Stocks in the Energy Community Level 49 26 April 2011

was never used. The conflict caused damage and lack of financial resources after the conflict prevented the restart of the new plant.

A Russian company, NefteGazInKor, purchased an 80% share in the Bosanski Brod Refinery, a 75.6% share in the Modriča Refinery and 80% share in Petrol Banja Luka. It was required to provide investment that would lead to significant rejuvenation of the BiH oil industry. These investments would ensure the functioning of the processing capacities of the new line which would increase the refinery's total annual capacity up to 4.2 million tons.

The refinery Bosanski Brod imports crude oil by oil pipeline JANAF connected to Omišalj sea terminal in Croatia.

Figure 23 Oil Infrastructure, BiH

BiH has around 800,000 m 3 storage capacity. Of those 532,707 m 3 are in Bosanski Brod refinery. Many of the storage tanks in BiH were damaged during the conflict. There are also tank facilities that need modernisation in order to comply with EU security standards. BiH owns a terminal in Port of Ploče in Croatia with a capacity 82,000 m 3 with a shipping capacity of 500 t/h and receiving capacity of 1,000 t/h. The terminal is operated by Naftni Terminali Federacije.

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Table 29 Crude Oil and Intermediate Products Storage Capacities in Bosanski Brod Refinery, BiH Product Capacity* (m 3) Crude oil 163,000 Intermediate products 122,863 Total 285,863 *Capacities in operation

Table 30 Storage Capacities for Petroleum Products, BiH

Location Product Capacity (m 3) LPG 3,241 Motor gasoline 31,272 Diesel 80,279 Bosanski Brod refinery Gas oil 4,705 Residual fuel oil 47,735 Other* 79,475 LPG 1,000 Motor gasoline 20,000 Sarajevo Jet fuel 3,000 Diesel 20,000 LPG 1,000 Mostar Motor gasoline 6,000 Diesel 30,000 LPG 1,000 Motor gasoline 3,000 Živinice Jet fuel 6,000 Diesel 10,000 Motor gasoline 32,000 Ploče Diesel 50,000 Motor gasoline 5,000 Čapljina Diesel 15,000 Motor gasoline 8,000 Bihać Jet fuel 27,000 Diesel 10,000 Ilijaš Diesel 28,000 Vrbanja n/a 20,900 Brezičani n/a 17,600 Banja Luka (Krajinapetrol a.d.) n/a 4,600 VardišteVišegrad n/a 3,500 Different smaller terminals n/a 10,000 Total 499,832 *Including naphtha, platformate bitumen and base oil

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6.4. Emergency Oil Stock Current Situation BiH has currently no emergency oil stocks and is understood by the Consultant to be evaluating possible options. 6.5. Additional required stockholding capacities The refinery currently has 163,000 m 3 of storage for crude oil in operation, but additional storage for crude oil and petroleum products could be provided after repair and modernisation. There is also a possibility to increase capacity in Port of Ploče or to lease storage from private companies. However, even with these measures, BiH needs new storage capacity to be built and / or existing storage capacities to rehabilitated and modernised.

In that regard, the Consultant assumed that about 2/3 rd of required stockholding capacities should be built new and other 1/3 rd should be supplied by repair or modernisation of existing capacity (Table 31). In this way there is a possibility to achieve oil stocks formation with lower financial burden to the consumers. 6.6. Legal Review At present, BiH does not have the legislation in place which regulates compulsory stocks of oil and petroleum products on the State level. The first steps towards creating the conditions to undertake obligation given in (then applicable) Directives 68/414/EEC, 73/239/EEC and 98/93/EC, which prescribed the obligation of forming the required reserves of crude oil ("Emergency Oil Stock") as well as procedures in situations of supply interruptions, were made in 2003 when the Government of the Federation BiH by Decision No. 599/03 (Official Gazette FBiH, 60/03) established the Company for storage of liquid fuels "Terminali Federacije " Ltd., Sarajevo. The main task of the Company is just keeping of emergency stocks.

The Republika Srpska has recently adopted a new Law on oil and petroleum products (Official Gazette RS No. 36/09) that stipulates emergency oil stocks. According to the Law on oil and petroleum products of Republika Srpska, oil stocks are supposed to be in place by the beginning of 2012 comprising three groups of oil products: • motor gasoline and aviation gasoline; • diesel fuels, gas oil and jet fuel; • fuel oil.

Emergency stocks can consist of crude oil and semi final oil products, up to 40% for motor gasoline, aviation gasoline, diesel fuels, gas oil and jet fuel and up to 50% for fuel oil. State reserves, operational reserves, oil products in tanks of vehicles for driving and other transport means, products in rail cars, road tankers, gas filling stations tanks, in tanks of consumers are excluded from emergency oil stocks.

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The Government of Republika Srpska is preparing sub laws and/or other legal binding documents for emergency oil stock organisation system, financing and dynamics of formation.

The Federal Ministry of Energy, Mining and Industry of the Federation of BiH is about to finish and adopt Decree on organization and regulation of oil sector in BiH. The aim of this document is to set up legal framework for security supply improvement, organization and regulation of oil sector in the Federation of BiH, increase level of transparency in doing oil business, increase petroleum products quality, as well as establishment of emergency oil stocks upon adoption of state level legal framework in line with Directive 2009/119/EC. The draft of the Decree stipulates establishment of 90days oil stocks, its composition, which stocks can/cannot be taken into calculation, dynamics of establishment, etc.

6.7. Financial Aspects of Oil Stocks The total obligation of emergency stocks to be held in the period of 20112021 (Table 26) is expected to be 460,000 toe in 2021. According to the proposed structure of compulsory stocks it is necessary to ensure 426,000 m 3 of storage for petroleum products, and 130,000 m 3 for crude oil by 2020. It is estimated that in BiH, there is about 142,000 m 3 of storage capacity available for stockholding of oil products and about 40,000 m3 for crude oil. Accordingly, it is necessary to build additional 284,000 m 3 of storage capacity for oil products and 90,000 m 3 for crude oil (Table 31). Total investment in construction of new storage capacities and modernization of existing facilities is estimated at €103 million.

Table 31 Required Volume and Corresponding Investments in Storage, BiH, 2010-2020 Construction Modernisation m3 € m3 € Oil products 284,000 68,160,000 142,000 13,632,000 Crude oil 90,000 18,000,000 40,000 3,200,000 Total 374,000 86,160,000 182,000 16,832,000

Based on the calculated total obligation to 2021 BiH needs to purchase petroleum products and crude oil for €212 million (Table 32).

Table 32 Needed Investment in Crude Oil and Oil Products Purchase, BiH, 2010-2020 Tonnes € Oil products 337,388 166,676,453 Crude oil 105,434 45,310,004 Total 442,822 211,986,457

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In order to generate finance for emergency stocks formation in BiH, the Consultant recommends collection of fee paid by the producers and importers of petroleum products. As the petroleum products price is not regulated the cost of the stockholding system would be included in the retail price of motor fuels. The liable body should be responsible for collection of the fees.

The requirement for the modernisation of existing the storage capacity (Table 33), construction of new facilities (Table 34) and the formation or acquisition of stocks were defined for the purpose of calculating the compensation to be paid by importers and producers of petroleum products per each litre of gasoline, gas oil, residual fuel oil and LPG sold on the BiH market. The proposed scenario costs include investments in storage facilities, procurement of petroleum products and crude oil inventories, renewal of stocks as well as operational costs of the entire system (Table 35).

Table 33 Storage Tank Modernisation Plan, BiH, 2010-2020

m3 2012 2014 2016 2018 2020 Products 50,000 92,000 0 0 0 Crude oil 40,000 0 0 0 0

Table 34 Storage Tank Construction Plan, BiH, 2010-2020 m3 2012 2014 2016 2018 2020 Products 0 40,000 80,000 100,000 64,000 Crude oil 0 40,000 40,000 0 0

Table 35 Planned Costs (Storage Capacities, Crude Oil and Products Procurement and Operational Costs), BiH, 2010-2020 × 1 000 € 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Products 0 25,321 760 73,367 2,766 54,800 3,982 69,024 5,502 47,129 Crude oil 0 18,127 608 23,535 1,216 24,143 1,824 1,824 1,824 1,824 Total 0 43,448 1,368 96,902 3,982 78,943 5,806 70,848 7,326 48,953

With the defined scenario of emergency oil stocks formation (Figure 23) and forecast consumption of petroleum products in BiH, the average fee paid by the importers and manufacturers of petroleum products per each litre of gasoline, gas oil, residual fuel oil and LPG placed on the market would amount to 0.020 €/l. The proposed fee ensures the formation of 90day supplies of oil and petroleum products by the year 2020 in BiH.

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Figure 24 Proposed Build-up of Emergency Stocks Formation in BiH, 2012-2020

500 Crude oil Oil products 450

400

350

300

250

x 1 000 t 000 1 x 200

150

100

0 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 6.8. Organizational Aspects of the Stockholding System Currently, BiH does not have an established emergency stocks system. It would be necessary to form a CSE 3 or relevant body under the jurisdiction of the state level authority of BiH that would execute the legal obligations stipulated in the Directive 2009/911/EC. The main obligations comprise providing the required volume of storage capacities, purchase and maintenance of emergency stocks, and reporting emergency oil stock levels to the relevant bodies. 6.9. Intervention in Case of Supply Disruption There is no legislation that regulates activities in case of oil supply disruptions. 6.10. Required Legislative Changes Even though Republika Srpska has designed a basic legislative framework according to the EU requirements for oil stocks it has still to include recent changes included in the Directive 2009/119/EC in its legal acts.

The required changes of existing legal acts and additional binding legal documents should be changed according to the following: • The method of calculation of the obligatory oil stocks (90 days of average daily net imports) Article 3 of the Directive; Annexes I, II and III of the Directive • The composition of stocks is regulated in Article 9 of the Directive – and this should be enacted into the appropriate new law

3 A CSE was chosen in this case as the market in BiH is small and there is less opportunity for companies to directly partake in storage of petroleum products and efficiently allocate costs

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• The quantities of emergency stocks can be stored in form of crude oil in larger share than 40 or 50% Article 9 of the Directive • Include all other aspects stipulated in the Directive 2009/119/EC • Design the legislation for the procedure in case of supply disruptions Article 20 of the Directive • There needs to be one CSE for the whole of BiH not separate bodies for stock holding within BiH’s constituent entities in order to comply with Directive 2009/119/EC and the Treaty.

However, BiH has to implement the complete legal framework regarding the emergency stockholding at the state level. This includes the procedure in case of supply disruptions. 6.11. Road Map Firstly BiH requires a legal framework for the storage of emergency oil stocks that complies with Directive 2009/119/EC. Secondly is the formation of a CSE and appropriate emergency response planning and coordination procedures. Thirdly is the construction of additional storage facilities and rehabilitation of those which are suitable. It is suggested that BiH should undertake a careful cost benefit analysis as to whether the CSE should own storage directly or lease and additional capacity from other operators.

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Figure 25 Road Map Gantt Diagram, BiH

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7. Croatia Croatia has a well developed oil sector. The largest oil company is INA whose major shareholder is MOL with 47%, whilst the state holds 44% of the shares. INA is producing oil and gas in Croatia and abroad and produces petroleum products in two domestic oil refineries. INA operates a regional retail network of petrol stations in Croatia and BiH, Slovenia and Montenegro. OMV, Lukoil and Tifon have a significant share of the Croatian retail market. 7.1. Crude Oil and Oil Product Supply and Demand The following figures provide a summary of the current and forecast position in Croatia based on the methodology outlined in Section3.1.

Figure 26 Oil and Condensate Production, Croatia, 2007-2020

900

800

700

600

500

x 1 0001x t 400

300

200

100

0 2007. 2008. 2009. 2010 2015 2020 Crude oil Other condensate

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Figure 27 Crude Oil Import, Croatia, 2007-2020

Figure 28 Net Production of Petroleum Products, Croatia, 2007-2020

6.000

5.000

4.000

3.000 x 1x000 t 2.000

1.000

0 2007 2008 2009 2010 2015 2020

LPG Motor gasoline Kerosene and jet fuel Naphtha Gas/diesel oil Residual fuel oil Petrol coke Bitumen Lubricants Other

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Figure 29 Petroleum Product Imports, Croatia, 2007-2020

2.500

2.000

1.500

x 1x000 t 1.000

500

0 2007 2008 2009 2010 2015 2020 LPG Motor gasoline Kerosene and jet fuel Gas/diesel oil Residual fuel oil Petrol coke Bitumen Lubricants Other

Figure 30 Petroleum Product Exports, Croatia, 2007-2020

3.500

3.000

2.500

2.000

x 1 0001x t 1.500

1.000

500

0 2007 2008 2009 2010 2015 2020 LPG Motor gasoline Kerosene and jet fuel Naphtha Gas/diesel oil Residual fuel oil Petrol coke Bitumen Lubricants Other

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Figure 31 Domestic Consumption of Petroleum Products, Croatia, 2007-2020

5.000 4.500 4.000 3.500

3.000

x 1 0001x t 2.500 2.000

1.500 1.000

500 0 2007 2008 2009 2010 2015 2020 LPG Motor gasoline Kerosene and jet fuel Naphtha Gas/diesel oil Residual fuel oil Petrol coke Bitumen Lubricants Other

Figure 32 Oil Product Supply and Demand, Croatia, 2007-2020

7.000

6.000

5.000

4.000

3.000

2.000

1.000 x 1 0001x t 0

1.000 Production Imports Exports Consumption

2.000

3.000

4.000 2007 2008 2009 2010 2015 2020

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7.2. Emergency Oil Stock Obligation The following tables give the Consultant’s calculated emergency oil stocks obligation for Croatia based on the methodology given in Section3.2.

Table 36 Crude Oil Equivalent of Imports of Petroleum, Croatia, 2009-2020 × 1 000 toe 2009 2010 2015 2020 Crude oil 3,886 4,258 4,730 5,209 LPG 178 197 223 236 Motor gasoline 465 597 632 722 Kerosene and jet fuel 4 10 22 29 Gas/diesel oil 280 140 221 333 Residual fuel oil 288 402 311 113 Petrol coke 127 100 456 437 Bitumen 103 58 107 112 Lubricants 22 19 22 24 Other 138 120 55 17 Total 3,343 3,269 3,605 3,551 Daily net imports 9.2 9.0 9.9 9.7

Table 37 90 Days of Daily Net Imports of Crude Oil and Petroleum Products, Croatia, 2009-2020 × 1 000 toe 2009 2010 2015 2020 Crude oil 958 1,050 1,166 1,284 LPG 44 49 55 58 Motor gasoline 115 147 156 178 Kerosene and jet fuel 1 3 5 7 Gas/diesel oil 69 34 54 82 Residual fuel oil 71 99 77 28 Petrol coke 31 25 112 108 Bitumen 25 14 26 28 Lubricants 5 5 5 6 Other 34 30 14 4 Total 824 806 889 876

Table 38 Crude Oil Equivalent of Inland Consumption, Croatia, 2009-2020 × 1 000 toe 2009 2010 2015 2020 Motor gasoline 835 827 853 879 Kerosene and jet fuel 117 132 150 168 Gas/diesel oil 2,156 2,137 2,195 2,267 Residual fuel oil 738 687 663 212 Total 3,846 3,783 3,861 3,527 Daily inland consumption 10.5 10.4 10.6 9.7

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Table 39 61 Days of Average Daily Inland Consumption, Croatia, 2009-2020 × 1 000 toe 2009 2010 2015 2020 Motor gasoline 140 138 143 147 Kerosene and jet fuel 20 22 25 28 Gas/diesel oil 360 357 367 379 Residual fuel oil 123 115 111 35 Total 643 632 645 589

Table 40 Stockholding Obligation According to Average Daily Net Imports, Croatia, 2010-2021 × 1 000 toe 2010 2011 2016 2021 Petroleum products 275 269 296 292 Crude oil 550 537 593 584 Total 824 806 889 876 Days of net imports 90 90 90 90

Given the structure of supply and demand in Croatia, the proposed stock holding is detailed in Table 41.

Table 41 Proposed Composition of Compulsory Stocks, Croatia, 2010-2021 × 1 000 t 2010 2011 2016 2021 Motor gasoline 55 54 60 67 Kerosene and jet fuel 8 9 11 13 Gas/diesel oil 141 139 154 172 Residual fuel oil 48 45 47 16 Crude oil 630 616 679 669 Total 882 862 951 936

On the basis of the proposed composition of compulsory stocks, the required volume of storage at 2021 is shown in Table 42.

Table 42 Required Volume of Storage for Compulsory Stocks, Croatia, 2010-2021 m3 2010 2011 2016 2021 Motor gasoline 72,916 71,794 80,040 88,960 Kerosene and jet fuel 10,113 11,267 13,860 16,794 Gas/diesel oil 168,106 165,650 183,775 204,776 Residual fuel oil 54,285 50,283 52,417 18,033 Crude oil 755,988 739,215 815,084 802,957 Total 1,061,407 1,038,209 1,145,176 1,131,520

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7.3. Current Oil Infrastructure This section gives an overview of the Consultant’s understanding of the current infrastructure in Croatia.

Figure 33 Oil Infrastructure, Croatia

In Croatia, INA has two oil refineries located in Rijeka (Urinj) and Sisak. The refinery at Rijeka is midsized and it is located on the coast, allowing access to the port for deepdraft ships and the JANAF pipeline system. The refinery’s location is suitable for market supply, not only to Croatia but also to the southern parts of BiH, Slovenia, Montenegro, and other Mediterranean countries. The Rijeka refinery annually processes 33.5 million tons of oil and manufactures a certain number of petroleum products intended for the domestic and foreign markets.

The refinery in Sisak is 50 km from Zagreb, and the Zagreb area has the highest consumption of petroleum products in the country. The refinery’s location is also suitable to supply other local markets in Croatia, as well as those in northwestern BiH, northeastern Slovenia and western and northern Serbia. The refinery processes domestic crude (produced by INA) in addition to Russian crude oil imported through the oil pipelines Druzhba 1 and Druzhba 2, as well as from the Mediterranean Sea by the JANAF oil pipeline. The refinery annually processes 2.0 to 2.2 million tons of oil and manufactures a certain number of petroleum derivates that are sold on the domestic and the neighbouring export markets.

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In 2005, INA launched an extensive refinery modernisation program, which is essential for the production of higherquality products that meet EU requirements and specification. Meeting EU specifications was achieved at the end of 2010.

The JANAF oil pipeline connects the harbour at Omišalj on Krk Island and refineries in Rijeka and Sisak in Croatia, Bosanski Brod Refinery in BiH, Novi Sad and Pančevo Refineries in Serbia. It also extends to Hungary where it connects to the Druzhba pipeline. The installed pipeline capacity is 20 Mt/y.

Tank storage for crude oil is located at the Rijeka and Sisak refineries and in JANAF pipeline terminals of Omišalj and Sisak. In total, Croatia has 3.43 million m 3 of storage capacities for oil and oil products.

Table 43 Crude Oil and Semi Products Storage Capacities in Croatia Total capacity Terminal owner Location Product (m 3) Omišalj Terminal Crude oil 760,000 JANAF Sisak Terminal Crude oil 100,000 Virje Crude oil 40,000 Crude oil 336,000 Rijeka refinery Semi products 597,000 INA Crude oil 310,000 Sisak refinery Semi products 350,830

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Table 44 Petroleum Products Storage Capacities, Croatia Location Product Capacity (m 3) Motor gasoline 20,000 Omišalj Diesel 40,000 Sisak (Refinery) n/a 197,280 Rijeka (Refinery) n/a 190,500 Motor gasoline 10,200 Zabok Diesel 19,800 Gas oil 5,300 Motor gasoline 31,500 Motor gasoline in 15,000 construction Zadar (Gaženica) Diesel 38,000 Diesel in construction 45,000 Gas oil 3,500 Fuel oil 21,000 Motor gasoline 10,000 Diesel 28,300 Zagreb Gas oil 16,000 n/a 75,000 Motor gasoline 4,500 Ploče Diesel 19,500 Motor gasoline 500 Sesvetski Kraljevac Diesel 500 Gas oil 500 Motor gasoline 5,348 Vukovar Diesel 6,934 Gas oil 1,300 Karlovac Diesel 1,000 Osijek n/a 9,500 Opatovac n/a 20,000 Solin n/a 70,000 Varaždin n/a 1,300 Sustjepan n/a 400 Vinkovci n/a 1,300 Beli Manastir Diesel 1,200 Motor gasoline 150 Gospić Diesel and gas oil 550 Motor gasoline 3,100 Slavonski Brod Diesel 2,100 Gas oil 1,000 Total 917,062

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Table 45 LPG Storage Capacities, Croatia Capacity Location (m 3) Varaždin 180 Islam Latinski 516 Buzet 304 Sv. Križ Začretje 6,270 Zaprešić 750 Posedarje (Brala trade) 150 Novigrad 100 Žminj 160 Labin 120 Kerestinec 180 Brezovica 450 Pula 600 Rijeka 520 Osijek 380 Kaštel Sućurac 300 Metković 100 Pićan 200 Vojnić 500 Omiš 300 Umag 100 Šibenik 300 Nova Gradiška 750 Drniš 200 Slavonski Brod 500 Zagreb 4,749 Zadar 200 Omišalj 500 Total 19,379

Croatia has three ports which can receive oil and oil products: Omišalj, Zadar, and Ploče. The Port of Omišalj is located on the Island of Krk. Two tanker berths with a sea depth of 30m may accommodate tankers up to Very Large Crude Carrier class. Each of the berths has four unloading arms for crude oil and two for oil products, with reloading capacity of 5,000 m 3/h each, i.e. 20,000m 3 of crude oil per berth per hour.

In the Gaženice area of Zadar there is a terminal for oil products. Furthermore, there are two terminals for reception and dispatching of liquid cargo in the Port of Ploče: "Port of Ploče Terminal" and "Oil terminals of FBiH".

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7.4. Emergency Oil Stock Current Situation This section provides a summary of the current emergency stock holding situation in Croatia.

Table 46 Emergency Stocks Held by HANDA, Croatia Tonnes 31 Dec 2009 31 Jul 2010 Crude oil 293,176 293,043 Motor gasoline 10,000 30,000 Diesel 33,000 25,000 Jet fuel 0 0 Gas oil 0 0 Fuel oil 35,000 35,000

Table 47 Emergency Stocks Held by the Industry, Croatia Tonnes 31 Dec 2009 31 Jul 2010 Crude oil 42,760 48,084 Motor gasoline 10,720 10,720 Diesel 23,920 23,920 Jet fuel 900 900 Gas oil 4,752 4,752 Fuel oil 7,725 7,725

Table 48 Coverage of Days of Consumption, Croatia 31 Dec 2009 31 Jul 2010 Days of coverage HANDA Industry HANDA Industry Motor gasoline 58 15 64 15 Diesel 33 10 26 10 Jet fuel 51 13 31 10 Gas oil 33 11 34 12 Fuel oil 60 11 66 11

7.5. Additional Required Stockholding Capacities The stockholding agency, HANDA, and pipeline company, JANAF, have signed an agreement to build new storage capacities for stockholding purposes of 480,000 m 3 in Omišalj and Sisak for crude oil and of 120,000 m 3 for petroleum products in Zagreb. The agreement is based on “the dynamics of establishment and restoration of compulsory oil stocks and petroleum products, their storage organization and regional distribution” (Official Gazette No. 149/2009). The project is already in progress. The plan is also to build two more terminals for oil products on government land.

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The Republic of Croatia has recently concluded intergovernmental agreements on storage of emergency stocks with Republic of Germany and Republic of Hungary. 7.6. Financial Aspects of Oil Stocks This section sets out the Consultant’s opinion of what Croatia is likely to require in terms of investment. Croatia has conducted a more indepth review of its capacity requirements and the figures quoted here are only an approximate guide.

Table 49 Croatian Capacity Requirements

Volume (m 3) Capex ( €) Stock Cost ( €) Products 367,000 88,080,000 132,172,712 Crude 820,000 164,000,000 287,442,938 Total 1,187,000 252,080,000 419,615,650

Emergency oil stocks in Croatia are financed through a fee determined each year for each of the petroleum products group (Official Gazette No. 146/2010) as follows:

• for petroleum products of Group I (motor gasoline and gasoline for aircrafts) the fee amounts 200 HRK per ton • for products of Group II (diesel, gas oil and jet fuel) the fee is 300 HRK per ton and • for products of Group III (fuel oil) the fee is 50 HRK.

This system has worked well in meeting the Agency budget and it is already well established.

7.7. Legal Review The Law on Oil and Petroleum Products Market (Official Gazette No. 57/06) and Law on Amendments of the Law on Oil and Petroleum Products Market (Official Gazette No. 18/11) regulates compulsory oil stocks in accordance with EU directives, establishes the Croatian Compulsory Oil Stocks Agency (HANDA) and defines the time framework to form the compulsory oil stocks.

The quantity of stocks is calculated based on 90 day consumption in the previous year from 31 March 2013 to 1 April 2013 based on 90 days of net imports or 61 days of average inland consumption in previous year which of the two is larger. Compulsory oil stocks are to be formed and fully owned by the Agency by 31 July 2012. In the meantime stocks are partly held by the industry and their obligation decreases every year.

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The statistical summaries on emergency stocks and complete copy of the Registry will be submitted to the European Commission after Croatia joins the European Union. The use of emergency stocks based on the decisions on European Commission and IEA will also be possible after joining the EU.

The Ministry responsible for the oil sector is in charge of the coordination and cooperation with the European Commission and IEA especially in the matter or security of oil supply. Technical support to the Ministry will be provided by HANDA. They will together represent Republic of Croatia in the expert and advisory bodies of the European Commission and IEA.

The Statute of the Croatian Agency for Compulsory Stocks of Oil and Petroleum Products (Official Gazette No. 6/07) determines all issues for operational activities of the Agency. Some specific issues concerning activities of the Agency are formulated in Regulation “on some issues relating activities of Croatian agency for compulsory oil stocks” (Official Gazette No. 64/09).

Every year the Croatian Government gives a Decision on the quantity and structure of compulsory oil stocks and petroleum products (for year 2010, Official Gazette No. 41/2010) that lists the amount of each petroleum product to be held by HANDA and energy organisations.

The Plan of providing, the dynamics of the formation and replenishment of compulsory stocks of oil and petroleum products, storage and organization of the regional distribution (Official Gazette No. 149/2009) gives the procedures for securing compulsory stocks and determines the need for new capacities to be built on specific locations.

The Decision on the compensation fee regarding the financing of Croatian Compulsory Oil Stocks Agency for 2011 (Official Gazette No. 146/2010) determines the level of fees for each ton of oil products (for each group of products based on Law on Oil and Petroleum Products Market) placed on Croatian market. 7.8. Organizational Aspects of the Stockholding System HANDA is managed by the Governing Council appointed by the Government based on the suggestion of the Minister of Energy. Members of the Governing Council include one representative of the Ministry of Energy and one representative of the Ministry responsible for finance, together with three independent experts. Members of the Governing Council are not employees of HANDA.

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The Director General is responsible for the professional work and legality of the business operations of HANDA. The Director General represents HANDA individually and without limitations and conducts all legal actions in the name and on behalf of HANDA.

The Director General is appointed by the General Council based on a public contest. The Director General’s mandate lasts four years with the possibility of reelection. The Director General is responsible to the Governing Council for its work.

Figure 34 HANDA Organisation Chart, Croatia

7.9. Intervention in Case of Supply Disruption HANDA is an independent body that is obligated to form and manage the oil stocks. HANDA receives reports from energy industry participants on a weekly basis to assess the state of the oil market to be able to record any possibility of supply disruption. It is obliged to notify any disturbance to the Expert Commission for monitoring of regular market supply of oil and oil products that has to be appointed by the Government based on the proposal of the Ministry within a month from the entry into force of the Law on Amendments of the Law on Oil and Petroleum Products Market (Official Gazette 18/2011). The Commission would supervise a regular supply of oil and petroleum products to the Croatian market, and proposes measures to the Government in case of any disturbance in the oil market.

The intervention plan in case of accidental disruption to the market supply of crude oil and petroleum products (Official Gazette No. 68/2008) establishes procedures and criteria for identification of an extraordinary disturbance in

Emergency Oil Stocks in the Energy Community Level 71 26 April 2011

market supply of oil and petroleum products and procedures for normalisation of the market supply of oil and petroleum products. This includes:

• measures to reduce petroleum products consumption • conditions for consumption • renewal of compulsory stocks of oil and petroleum products

The Expert commission is responsible for the enforcement of the Intervention plan.

7.10. Required Legislative Changes Croatia has recently changed its legislative framework to meet the EU requirements on oil stocks and now it completely complies with the Directive 2009/119/EC in its legal acts. The various sublaws and regulations will follow within a year.

7.11. Road Map Croatia is the most advanced Beneficiary of the study in terms of compliance with Directive 2009/119/EC. Croatia appears to have adequate tankage capacity expansion and emergency oil stockpiling plans envisaged and should continue with these. The organisational structure for holding, auditing and reporting emergency stocks is in place. The Consultant has been informed that HANDA has completed ticketing arrangements for emergency stocks to be held in Germany and Hungary. This arrangement should be adequate to meet Croatia’s obligation under Directive 2009/119/EC. However, the Consultant has not seen the detail of the agreements and recommends that Croatia keeps the Energy Community informed of the details. The Consultant’s envisaged road map for Croatian compliance is shown in Figure 35 which allows flexibility for facilities construction or utilising the ticketing arrangements.

Emergency Oil Stocks in the Energy Community Level 72 26 April 2011

Figure 35 Road Map Gantt Diagram, Croatia

Emergency Oil Stocks in the Energy Community Level 73 26 April 2011

8. FYR Macedonia FYR Macedonia has no domestic production of crude oil. Crude oil supply is sent by pipeline from the Thessaloniki refinery in Greece to the OKTA refinery which produces sufficient petroleum products for the domestic market. 8.1. Crude Oil and Oil Product Supply and Demand The following figures provide a summary of the current and forecast position in FYR Macedonia based on the methodology outlined in Section 3.1.

Figure 36 Crude Oil Import, FYR Macedonia, 2007-2020

1.600

1.400

1.200

1.000

800 x1000 t 600

400

200

0 2007 2008 2009 2010 2015 2020

Emergency Oil Stocks in the Energy Community Level 74 26 April 2011

Figure 37 Net Production of Petroleum Products, FYR Macedonia, 2007-2020

1.400

1.200

1.000

800

x 1 0001x t 600

400

200

0 2007 2008 2009 2010 2015 2020

LPG Motor gasoline Kerosene and jet fuel Gas/diesel oil Residual fuel oil

Figure 38 Petroleum Product Imports, FYR Macedonia, 2007-2020

400

350

300

250

200 x 1x000 t 150

100

0 2007 2008 2009 2010 2015 2020 LPG Motor gasoline Kerosene and jet fuel Naphtha Gas/diesel oil Petrol coke Bitumen Lubricants Other

Emergency Oil Stocks in the Energy Community Level 75 26 April 2011

Figure 39 Petroleum Product Exports, FYR Macedonia, 2007-2020

700

600

500

400

x 1 000x1 t 300

200

100

0 2007 2008 2009 2010 2015 2020 LPG Motor gasoline Kerosene and jet fuel Gas/diesel oil Residual fuel oil Petrol coke Bitumen Other

Figure 40 Domestic Consumption of Petroleum Products, FYR Macedonia, 2007-2020

1.000

800

600

x1000 t 400

200

0 2007 2008 2009 2010 2015 2020 LPG Motor gasoline Kerosene and jet fuel Naphtha Gas/diesel oil Residual fuel oil Petrol coke Bitumen Lubricants Other

Emergency Oil Stocks in the Energy Community Level 76 26 April 2011

Figure 41 Oil Product Supply and Demands, FYR Macedonia, 2007-2020

1.500

1.000

500

x1000 t 0 Production Import Export Consumption

500

1.000 2007 2008 2009 2010 2015 2020

8.2. Emergency Oil Stock Obligation The following tables give the Consultants calculated emergency oil stocks obligation for FYR Macedonia based on the methodology given in Section 3.2.

Table 50 Crude Oil Equivalent of Imports of Petroleum Products, FYR Macedonia, 2009- 2020 × 1 000 toe 2009 2010 2015 2020 Crude oil 967 1,060 1,270 1,352 LPG 32 20 26 37 Motor gasoline 28 75 211 222 Kerosene and jet fuel 21 20 33 35 Gas/diesel oil 32 47 252 252 Residual fuel oil 76 164 6 42 Petrol coke 41 62 69 85 Bitumen 6 5 8 10 Lubricants 10 10 11 12 Other 1 1 1 1 Total 964 851 882 946 Daily net imports 2.6 2.3 2.4 2.6

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Table 51 90 Days of Daily Net Imports of Crude Oil and Petroleum Products, FYR Macedonia, 2009-2020 × 1 000 toe 2009 2010 2015 2020 Crude oil 238 261 313 333 LPG 8 5 6 9 Motor gasoline 7 18 52 55 Kerosene and jet fuel 5 5 8 9 Gas/diesel oil 8 12 62 62 Residual fuel oil 19 41 1 10 Petrol coke 10 15 17 21 Bitumen 1 1 2 2 Lubricants 2 2 3 3 Other 0 0 0 0 Total 238 210 218 233

Table 52 Crude Oil Equivalent of Inland Consumption, FYR Macedonia, 2009-2020 × 1 000 toe 2009 2010 2015 2020 Motor gasoline 148 138 144 159 Kerosene and jet fuel 2 2 2 1 Gas/diesel oil 452 475 518 574 Residual fuel oil 291 221 194 160 Total 892 836 858 893 Daily inland consumption 2.4 2.3 2.3 2.4

Table 53 61 Days of Average Daily Inland Consumption, FYR Macedonia, 2009-2020 × 1 000 toe 2009 2010 2015 2020 Motor gasoline 25 23 24 27 Kerosene and jet fuel 0 0 0 0 Gas/diesel oil 75 79 87 96 Residual fuel oil 49 37 32 27 Total 149 140 143 149

Assuming that FYR Macedonia would not make a commitment to maintain at least 30 days of specific stocks, than at least one third of its stockholding obligation has to be in the form of products (Table 54).

Emergency Oil Stocks in the Energy Community Level 78 26 April 2011

Table 54 Stockholding Obligations According to Average Daily Net Imports, FYR Macedonia, 2010-2021 × 1 000 toe 2010 2011 2016 2021 Petroleum products 79 70 73 78 Crude oil 158 140 145 155 Total 238 210 218 233 Days of net imports 90 90 90 90

Table 55 Proposed Composition of Compulsory Stocks, FYR Macedonia, 2010-2021 × 1 000 t 2010 2011 2016 2021 Motor gasoline 12 11 11 13 Kerosene and jet fuel 0 0 0 0 Gas/diesel oil 37 36 40 46 Residual fuel oil 24 17 15 13 Crude oil 182 160 166 178 Total 254 224 233 249

On the basis of the proposed composition of compulsory stocks, the required volume of storage until 2021 is shown in Table 56.

Table 56 Required Volume of Storage for Compulsory Stocks, FYR Macedonia, 2010- 2021 m3 2010 2011 2016 2021 Motor gasoline 16,004 14,111 14,862 16,900 Kerosene and jet fuel 208 182 159 126 Gas/diesel oil 43,750 43,389 47,847 54,456 Residual fuel oil 26,619 19,005 16,882 14,298 Crude oil 217,892 192,324 199,533 213,802 Total 304,473 269,010 279,284 299,582

Emergency Oil Stocks in the Energy Community Level 79 26 April 2011

8.3. Current Oil Infrastructure This section provides a summary of the Consultant’s understanding of the current oil infrastructure within FYR Macedonia

Figure 42 Oil Infrastructure, FYR Macedonia

The OKTA refinery near Skopje has a nameplate capacity of 2.5 Mt/y but operates with a low level of utilisation. The OKTA refinery produces motor gasoline of EURO V standard, leaded motor gasoline with maximum 0.005 g/l of lead, diesel fuel of euro IV and V quality, jet fuel, LPG, extra light fuel oil with 1,000 ppm of sulphur, and fuel oil (80% with maximum 1% of sulphur for domestic market and 20% with maximum 2% sulphur for the UNMIK market). The refinery sells to FYR Macedonia, UNMIK and southern Serbia.

The refinery uses the Port of Thessaloniki for imports of crude oil via the Vardax pipeline connecting Thessaloniki and OKTA refinery. The pipeline is about 213 km long and has capacity of 2.5 Mt/y.

The storage capacity for oil and oil products in FYR Macedonia totals 468,420 m3. All of the storage capacity except in OKTA refinery and Štip are owned by Makpetrol Company and amount to approximately 75,000 m 3 located in different regions throughout FYR Macedonia. The OKTA refinery also has

Emergency Oil Stocks in the Energy Community Level 80 26 April 2011

rented crude oil storage capacities in the Port of Thessaloniki (Greece) of 195,000 m 3.

FYR Macedonia has no ports and no pipelines. Oil products are imported mostly by railroad and exported mostly by road transport.

Emergency Oil Stocks in the Energy Community Level 81 26 April 2011

Table 57 Petroleum Products Storage Capacities, FYR Macedonia Location Product Capacity (m 3) Crude oil 150,000 Semi products 29,000 LPG 6,000 Motor gasoline 48,000 Skopje OKTA refinery Jet fuel 8,700 Diesel 41,000 Gas oil 20,300 Fuel oil 79,600 LPG 500 Motor gasoline 300 Skopje Jet fuel 1,020 Diesel 27,800 Gas oil 10,100 LPG 1,000 Gostivar Motor gasoline 7,500 Motor gasoline 100 Ohrid Diesel 200 Gas oil 200 Motor gasoline 2,050 Jet fuel 50 Prilep Diesel 300 Gas oil 650 Motor gasoline 1,000 Jet fuel 150 Kocani Diesel 1,000 Gas oil 300 Motor gasoline 1,000 Kavadarci Diesel 900 Gas oil 500 Motor gasoline 5,400 Kumanovo Gas oil 2,700 Veles Fuel oil 10,000 Diesel 100 Tetovo Gas oil 200 LPG 400 Motor gasoline 2,600 Štip Diesel 2,600 Gas oil 2,600 Fuel oil 2,600 Total 468,420

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8.4. Emergency Oil Stock Current Situation

Emergency oil stocks for FYR Macedonia are held in the storage capacity of OKTA refinery and private companies. A summary of the current stock holding is given here.

Table 58 Emergency Stocks Held by OKTA Refinery, FYR Macedonia Product Quantity (t) Motor gasoline 95 5,662.5 Motor gasoline 98 906.0 Diesel 6,760.0 Gas oil 6,892.0 Fuel oil 8,000.0 LPG 202.9

Table 59 Emergency Stocks Held by Makpetrol, FYR Macedonia Product Quantity (t) Motor gasoline 95 4,490.6 Motor gasoline 98 245.4 Diesel 17,762.3 Gas oil 7,723.3 Fuel oil 3,939.4

Table 60 Emergency Stocks Held by Lukoil, FYR Macedonia Product Quantity (t) Motor gasoline 95 302.0 Motor gasoline 98 502.0 Diesel 169.0 Gas oil 507.0

Table 61 Total Quantity of Emergency Stocks held in FYR Macedonia Product Quantity (t) Motor gasoline 95 10,455.1 Motor gasoline 98 1,653.4 Diesel 24,691.3 Gas oil 15,122.3 Fuel oil 11,939.4 LPG 202.9 Total 64,064.4

Emergency Oil Stocks in the Energy Community Level 83 26 April 2011

Table 62 Coverage of Days of Consumption, FYR Macedonia Product Days of coverage Motor gasoline 35.9 Gas oil 38.6 Fuel oil 18.0 LPG 1.2

Petroleum products stocks are approximately equal to the calculated quantities required to be held as emergency oil stocks. However, the overall requirement for emergency oil stocks is not covered and the Consultant estimates that the remaining emergency oil stocks should be made up of approximately 180,000 tonnes of crude oil.

The target of the Government of FYR Macedonia is to have 70% reserves of products in the country and 30% of reserves in form of tickets by the end of 2015. According to the Midterm Programme for the Period 20102015, the establishment, preservation, restoration and use of the compulsory reserves of oil and oil derivatives, refers to:

• all types of motor and air gasoline • all types of diesel fuel and kerosene • extra light oil for household – EL 1 • LPG • fuel oil

8.5. Additional Required Stockholding Capacities In order to implement the legal commitments on basis of the Division Balance (fuel reserve makeup), the Directorate for compulsory reserves of oil and oil derivatives took over the reserves from the Agency for Commodity Reserves as the competent authority in 2010. The Directorate does not possess its own storage for petroleum products, but performs this activity by renting excise storage owned by the licensed trade companies for storage and keeping the compulsory reserves.

The storage in FYR Macedonia has a limited capacity to store the total quantities of compulsory reserves that should be established in accordance to requirements of the law for 90 days consumption. In order to overcome this, the Directorate can build its own capacity, store the reserves in rented capacity outside its national borders on the territory of EU member states by concluding bilateral agreements between the FYR Macedonia and EU member states, or hold part of the stocks in the form of tickets.

Emergency Oil Stocks in the Energy Community Level 84 26 April 2011

8.6. Legal Review The Law on Compulsory Reserves of Oil and Oil Derivatives (Official Gazette No. 84/08) regulates the formation, storing, renewal and use of the obligatory reserves of oil and oil derivates, the jurisdiction of the Directorate for compulsory reserves of oil and oil derivatives and other issues of significance for the obligatory reserves of oil and petroleum products. This Law harmonised the FYR Macedonia legislation with EU Council Directive 2006/67/EC.

In order to enhance the security of supply in the field of oil stocks, the Mid term Programme for establishment of compulsory reserves of oil and oil derivatives, construction, maintenance and buying of storage capacities 2010 2015 has been adopted by the Government. The Programme was prepared by the Directorate according to the Article 4 of the Law on compulsory reserves of oil and oil derivatives.

The overall aim of the Programme is ensuring the security of supply of oil derivatives, where the total quantities of mandatory reserves for each type of oil derivative should reach coverage of realised average daily consumption of that oil derivative for a period of 90 days in the previous calendar year (or 25% of the total realised consumption of the relevant type of oil derivative in the previous calendar year). The indicators for the realised average daily consumption of oil derivatives in 2009, for each derivative separately are applied for preparation of the emergency oil stocks management programme. According to the Midterm Programme, in the 5 year period, the following will be settled:

• The type, quantity and value of oil derivatives • The manner of storage and renewal and costs for storage and renewal of compulsory oil and oil derivatives reserves • The funds needed for financing the Midterm Programme

The Directorate for Compulsory Reserves of Oil and Oil Derivatives makes agreements with authorised trading and storage companies that possess a licence for storing oil or petroleum products and pursuant to the Law are obliged to store the compulsory reserves.

Pursuant to the Decree for Determining the Amount of the Compensation for Storage and Evaporation of the Compulsory Reserves of Oil Derivates (Official Gazette No. 44/2010), the companies that are obliged to store oil derivatives from the compulsory reserves are authorized to use oil derivatives for their own needs up to 30% per derivative, in the current calendar year. Companies have an obligation for the entire quantities of the oil derivatives used in this respect, to restock the compulsory reserves by 31 December each year. Income that companies realise from such use of the compulsory

Emergency Oil Stocks in the Energy Community Level 85 26 April 2011

reserves is considered as payment of the compensation for storage, keeping, renewal and evaporation of oil derivatives from the compulsory reserves, by the Directorate.

The Decree on the method for determining, calculating and payment of the amount of compensation for the compulsory reserves of oil and oil products that are payable on imports and / or production of oil products (Official Gazette No. 138/09) defines the method of fee calculation for compulsory reserves as that which is payable by the importers and producers of petroleum products for products sold on the FYR Macedonia market.

The Directorate is authorised to perform inspection of the compulsory reserves which are stored in the tankage of the licensed trade companies. Inspection shall be performed on the basis of Directorate’s internal procedure in the form of mandatory controls. 8.7. Financial Aspects of Oil Stocks The financing of the oil stocks is set by the Law on Compulsory Reserves of Oil and Oil Derivatives and shall be provided by the following:

• fee for mandatory reserves of oil and oil derivatives paid during both import of oil derivatives and production of oil derivatives • funds realized on the basis of international cooperation of programmes and projects • donations from domestic and foreign legal entities and natural persons • foundations and gifts • other sources

These funds shall represent income of the Directorate for compulsory reserves of oil and oil derivatives and are to be paid into a separate account, held with the treasury.

The Decree on the method for determining, calculating, and payment of the amount of compensation for the compulsory reserves of oil and oil products that are payable on imports and / or production of oil products (Official Gazette No.138/09) are set as follows:

• light distillates or light oil products (liquid petroleum gas LPG butane, propane and butane – propane mixtures, all types of motor gasoline and gasoline for aviation) 0.89 MKD/litre • high or middle distillates petroleum products (all types of vehicle diesel, gas oil or extra light heating oil and kerosene) 0.30 MKD/litre • heavy distillates and heavy oil products (all types) 0.74 MKD/kg

Emergency Oil Stocks in the Energy Community Level 86 26 April 2011

The fee is paid by the importers and producers of oil derivatives so it is included in the retail price of petroleum products.

The total obligation of emergency stocks to be held in the period of 20112021 (Table 54) increases and amounts to 233,000 toe in 2021. According to the proposed structure of compulsory stocks, it is necessary to have 106,000 m 3 of storage for petroleum products, and 215,000 m 3 for crude oil by 2020 (Table 56). It is estimated that in FYR Macedonia, there are about 77,000 m 3 of storage capacity available for oil products. Accordingly, it is necessary to build additional 29,000 m3 of storage capacity for oil products and 215,000 m3 for crude oil (Table 63). Total investment in construction of new storage capacities is estimated at €50 million.

Table 63 Required Volume and Corresponding Investments in Storage, FYR Macedonia, 2010-2021

Construction m3 € Oil products 29,000 6,960,000 Crude oil 215,000 43,000,000 Total 244,000 49,960,000

In accordance with the calculated total obligation up to 2021 FYR Macedonia needs to invest in the purchase of petroleum products and crude oil in amount of €79.8 million (Table 64).

Table 64 Needed Investment in Crude Oil and Products Purchase, FYR Macedonia, 2010-2020

Tonnes € Oil products 7,175 3,287,403 Crude oil 178,097 76,537,138 Total 185,272 79,824,541

The realisation of the Midterm Programme requires having 70% of the stockholding obligation in FYR Macedonia and provision for the remaining 30% by tickets in other countries. Until the end of 2015 the required investments could be covered by the average fee paid by the importers and manufacturers of petroleum products per litre of gasoline, gas oil, residual fuel oil and LPG placed on the market amounting to 0,020 €/l. After achievement of 90 days stockholding obligation fee would decrease because it would only include costs of storage ticketing and operational costs of FYR Macedonia based storage.

Emergency Oil Stocks in the Energy Community Level 87 26 April 2011

Figure 43 Proposed Build-up of Emergency Stocks Formation in FYR Macedonia, 2012- 2020

300 Crude oil Products Tickets 250

200

150 x 1 000 t 000 1 x

100

0 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

On the other hand, if FYR Macedonia chooses to meet its whole obligation in its own territory until the end of 2015 in physical stocks the average fee paid by the importers and manufacturers of petroleum products per each litre of gasoline, gas oil, residual fuel oil and LPG placed on the market would amount to 0.033 €/l. 8.8. Organizational Aspects of the Stockholding System Pursuant to the Law, the Directorate for compulsory reserves of oil and oil derivatives was established as a separate independent entity which is responsible for establishment, stocking, renewal and management of compulsory reserves of oil and oil derivatives. The Directorate for compulsory reserves of oil and oil derivatives has the following organisational structure:

Emergency Oil Stocks in the Energy Community Level 88 26 April 2011

Figure 44 Organisation of Directorate for Compulsory Reserves of Oil and Oil Derivatives, FYR Macedonia

The Directorate is led by the Director who is appointed by the Government of the FYR Macedonia. The Director is appointed with a mandate of 4 years with possibility for repeated selection. Along with the Director, the Directorate is managed by the Management Board composed of 7 members. The members of the Management Board of the Directorate are appointed by the Government of the FYR Macedonia. 8.9. Intervention in Case of Supply Disruption The procedure in case of oil and petroleum products supply disruption is stipulated under the Energy Law (Official Gazette No. 63/06, 36/07, 106/08 and 115/10). In the case of disruption of the energy system the Government shall, upon proposal of the Ministry, announce the criteria and requirements for a declaration of crisis, as well as the manner of supply of certain types of energy in such circumstances, the rights and obligations of the license holders regarding the pursuing of energy activities pursuant to the Law on Crisis Management (Official Gazette No. 29/05).

The Rulebook on the conditions and manner and procedure for issuing, changing, extension of licenses (Official Gazette No. 31/09) for practicing energy entities determines that the License contains requirements on the supply of practicing the activity under special conditions such as force majeure , change of conditions on the world market, extraordinary events and a conflict situation. It also requires that the annual report that each licensee

Emergency Oil Stocks in the Energy Community Level 89 26 April 2011

has to submit to the Energy Regulatory Commission includes information on supply measures when these in these special conditions arise. 8.10. Required Legislative Changes FYR Macedonia has a legislative framework according to the EU requirements on the oil stocks but it has to include recent changes in Directive 2009/119/EC in its legal acts.

These changes regard to: • The method of calculation of the obligatory oil stocks (90 days of average daily net imports) Article 3 of the Directive; Annexes I, II and III of the Directive • There is an obligation to submit statistical summaries of the level of emergency stocks on a regular bases for each month Article 12 and Annex IV of the Directive 2009/119/EC • There is an obligation to submit statistical summaries of the level of commercial stocks on a regular bases for each month Article 14 of the Directive 2009/119/EC • Biofuels can be taken into account when calculating stockholding obligation Article 16 of the Directive 2009/119/EC • The procedure in case of supply disruptions are to be refined to include the Commission and IEA to the process Article 20 of the Directive 2009/119/EC 8.11. Road Map FYR Macedonia has in place what the Consultant regards as adequate organisational structures for monitoring and reporting the level of stocks. In terms of the legal aspects, the Law on Compulsory Reserves of Oil and Oil Derivatives (Official Gazette No. 84/08) should be amended in order to comply with Directive 2009/119/EC. The Consultant believes the legislative changes should be minor and passed relatively quickly.

The infrastructure demands should be achievable within the required time frame. The use of external storage ticketing does significantly reduce the capital cost and allows for a concentration of storage of petroleum products nearer to where they would be required within FYR Macedonia. What may take longer is negotiating storage by ticketing arrangements within other countries.

To facilitate stocks being held in other countries, there needs to be strong and binding agreements between the countries that hold the emergency stocks and the country owner of those stocks and also the stockholding entities relevant economic entities. It is the Consultant’s conclusion that agreements would have to cover the following as a minimum to comply with Directive 2009/119/EC:

Emergency Oil Stocks in the Energy Community Level 90 26 April 2011

• Title at Country Level • Title at Central Stock Holding Entity / Storage Provider Level • Rights of access at the country level • Rights of access at the CSE / Storage Provider level • Provisions for drawdown of emergency stocks • All the above must apply when both countries are undergoing a period of supply interruption

FYR Macedonia might find these agreements difficult to conclude to a satisfactory level within the timeframe. The Consultants envisaged time frame is set out in Figure 45 and further discussion is given to region cooperation is given in Section 16.

Whilst FYR Macedonia does not have any intention to have the CSE body owning any facilities, the Consultant recommends that negotiations are opened promptly and FYR Macedonia keeps an open mind in terms of facilities construction and possible joint ownership if this is cost effective.

Emergency Oil Stocks in the Energy Community Level 91 26 April 2011

Figure 45 Road Map Gantt Diagram, FYR Macedonia

Emergency Oil Stocks in the Energy Community Level 92 26 April 2011

9. Moldova Moldova is currently establishing its reporting of the oil market and as such this section is limited but all information made available is presented here with the Consultant’s analysis. 9.1. Crude Oil and Oil Product Supply and Demand The following figures provide a summary of the current and forecast position in Moldova based on the methodology outlined in Section 3.1.

Figure 46 Crude Oil Production, Moldova, 2007-2020

8 x 1 000x1 t 6

0 2007 2008 2010 2015 2020

Figure 47 Net Production of Petroleum Products, Moldova, 2007-2020

x1000 t 6

0 2007 2008 2010 2015 2020 Gas/diesel oil Residual fuel oil

Emergency Oil Stocks in the Energy Community Level 93 26 April 2011

Figure 48 Petroleum Product Imports, Moldova, 2007-2020

1.200

1.000

800

600 x1000 t 400

200

0 2007 2008 2010 2015 2020

LPG Motor gasoline Kerosene and jet fuel Gas/diesel oil

Residual fuel oil Bitumen Lubricants Other

Figure 49 Domestic Consumption of Petroleum Products, Moldova, 2007-2020

1.200

1.000

800

600 x 1x000 t

400

200

0 2007 2008 2010 2015 2020 LPG Motor gasoline Kerosene and jet fuel Gas/diesel oil Residual fuel oil Bitumen Lubricants Other

Emergency Oil Stocks in the Energy Community Level 94 26 April 2011

Figure 50 Oil Product Supply and Demand, Moldova, 2007-2020

1.200

1.000

800

600

x 1 0001x t 400

200

0 Production Import Export Consumption 200

2007 2008 2010 2015 2020

9.2. Emergency Oil Stock Obligation The following tables give the Consultant’s calculated emergency oil stocks obligation for Moldova based on the methodology given in Section 3.2.

Table 65 Crude Oil Equivalent of Imports of Petroleum Products, Moldova, 2008-2020 × 1 000 toe 2008 2010 2015 2020 Crude oil 0 0 0 0 LPG 69 64 84 105 Motor gasoline 232 233 271 313 Kerosene and jet fuel 26 22 28 33 Gas/diesel oil 403 415 500 593 Residual fuel oil 9 16 18 20 Petrol coke 0 0 0 0 Bitumen 23 32 48 63 Lubricants 10 13 16 19 Other 3 1 1 1 Total 774 797 966 1,146 Daily net imports 2.1 2.2 2.6 3.1

Emergency Oil Stocks in the Energy Community Level 95 26 April 2011

Table 66 90 Days of Daily Net Imports of Crude Oil and Petroleum Products, Moldova, 2008-2020 × 1 000 toe 2008 2010 2015 2020 Crude oil 0 0 0 0 LPG 17 16 21 26 Motor gasoline 57 58 67 77 Kerosene and jet fuel 6 6 7 8 Gas/diesel oil 99 102 123 146 Residual fuel oil 2 4 4 5 Petrol coke 0 0 0 0 Bitumen 6 8 12 15 Lubricants 2 3 4 5 Other 1 0 0 0 Total 191 197 238 283

Table 67 Crude Oil Equivalent of Inland Consumption, Moldova, 2008-2020 × 1 000 toe 2008 2010 2015 2020 Motor gasoline 250 263 306 353 Kerosene and jet fuel 22 25 31 38 Gas/diesel oil 443 474 570 674 Residual fuel oil 20 27 28 31 Total 734 789 935 1,095 Daily inland c onsumption 2.0 2.2 2.6 3.0

Table 68 61 Days of Average Daily Inland Consumption, Moldova, 2008-2020 × 1 000 toe 2008 2010 2015 2020 Motor gasoline 42 44 51 59 Kerosene and jet fuel 4 4 5 6 Gas/diesel oil 74 79 95 113 Residual fuel oil 3 4 5 5 Total 123 132 156 183

Given the fact that Moldova has negligible refinery capacity, it was assumed that the total of their stockholding obligation would be in the form of products (Table 69).

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Table 69 Stockholding Obligations According to Average Daily Net Imports, Moldova, 2009-2021 × 1 000 toe 2009 2011 2016 2021 Petroleum products 191 197 238 283 Crude oil 0 0 0 0 Total 191 197 238 283 Days of net imports 90 90 90 90

Table 70 Proposed Composition of Compulsory Stocks, Moldova, 2009-2021 × 1 000 t 2009 2011 2016 2021 Motor gasoline 59 60 71 83 Kerosene and jet fuel 5 6 7 9 Gas/diesel oil 106 108 133 159 Residual fuel oil 5 6 7 7 Crude oil 0 0 0 0 Total 175 180 218 259

On the basis of proposed composition of compulsory stocks, the required volume of storage until 2021 is given in Table 71.

Table 71 Required Volume of Storage for Compulsory Stocks, Moldova, 2009-2021 m3 2009 2011 2016 2021 Motor gasoline 79,304 80,113 95,150 111,298 Kerosene and jet fuel 6,773 7,577 9,652 11,749 Gas/diesel oil 125,615 128,955 158,298 189,811 Residual fuel oil 5,462 6,813 7,398 8,158 Crude oil 0 0 0 0 Total 217,153 223,458 270,498 321,016

Emergency Oil Stocks in the Energy Community Level 97 26 April 2011

9.3. Current Oil Infrastructure This section gives a summary of what the Consultant understands to be the current oil infrastructure within Moldova.

Figure 51 Oil Infrastructure, Moldova

The only port on the Danube River is the Giurgiulesti International Free Port (GIFP) in the southernmost part of Moldova. It consists of a petroleum terminal, a cargo port and an industrial free zone. Due to its location on the Lower Danube with available water depths of up to 7m, GIFP is capable of receiving both inland and sea going vessels with a loading capacity of 10,000 tons. The Port has road and rail links.

The maximum transhipment capacity is in excess of 2 million tonnes per year. At the Giurgiulesti terminal there are eight tanks for petroleum products with capacities from 4,200 to 12,000 m 3 totalling 63,600 m 3. The port operator and owner is ICS Danube Logistics SRL.

The current petroleum products storage capacity is over 150,000 tons including state and industry storage capacity but excluding the army’s capacity. Detailed data about current storage capacities is not available.

The oil refinery in Komrat began operation in 2005 and it is the first refinery in the country. The refinery has a processing capacity of 600 bbl/d (30,000 tons/year) and processes crude oil extracted from a field in the southern region of Valeni, one of the country’s two oil fields.

Emergency Oil Stocks in the Energy Community Level 98 26 April 2011

There are no oil pipelines in Moldova. 9.4. Emergency Oil Stock Current Situation According to available data at the time there are no emergency oil and petroleum products reserves in Moldova. 9.5. Additional Required Stockholding Capacities As Moldova has got very limited storage capacities it should consider building required storage capacities or arrange bilateral agreement with the neighbouring country/countries for holding required quantities of stocks.

In the case of Moldova building its own storage, the required capacity is about 327,000 m 3 for compliance in 2021. 9.6. Legal Review According to available data there is no particular legislation dealing with emergency oil stocks.

According to the current legislation, the industry does not have any legal obligation to maintain petroleum stocks. For their own business purposes, however, they keep stocks in the tankage of importers and petrol stations. Currently Moldova’s industry keeps stocks of around 30 days consumption of the main petroleum products (gasoline, diesel and LPG). 9.7. Financial Aspects of Oil Stocks Total obligation of emergency stocks to be held in the period of 20112021 (Table 69) is estimated to increase to 283,000 toe by 2021. According to the proposed structure of compulsory stocks it is necessary to ensure 327,000 m 3 of storage for petroleum products by 2020. It is estimated that in Moldova, there is currently no storage capacity available for emergency stocks. Total investment in construction of new storage capacities is estimated at €78.5 million (Table 72).

Table 72 Required Volume and Corresponding Investments in Storage Capacities Construction, Moldova, 2010-2020 Construction m3 € Oil products 327,000 78,480,000

In accordance with the calculated total obligation to 2021, Moldova needs to purchase petroleum products costing €130.6 million (Table 73).

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Table 73 Needed Investment in Crude Oil and Products Purchase, Moldova, 2010-2020 Tonnes € Oil products 259,104 130,619,255

In order to finance emergency stocks formation in Moldova, the Consultant recommends collection of fee paid by the producers and importers of petroleum products. The expenses of stockholding system would be transferred to retail price of motor fuels. An appropriate body should be responsible for collection of the fee.

The requirement for the construction of new the facilities (Table 74) and the formation or acquisition of stocks were defined for the purpose of calculating the compensation to be paid by importers and producers of petroleum products per each litre of gasoline, gas oil, residual fuel oil and LPG sold on the Moldova market. The proposed scenario results in costs that include investments in storage facilities, procurement of petroleum products inventories, and renewal of stocks as well as operational costs of the system (Table 75).

The defined emergency oil stock formation scenario (Figure 52) and given the forecast consumption of petroleum products in Moldova, the average fee paid by the importers and manufacturers of petroleum products per each litre of gasoline, gas oil, residual fuel oil and LPG sold would amount to 0.022 €/l. Such fee ensures the formation of 90day supplies of petroleum products by the year 2020 in Moldova.

Table 74 Storage Tank Construction Plan, Moldova, 2010-2020 m3 2012 2014 2016 2018 2020 Oil products 60,000 80,000 60,000 60,000 67,000

Table 75 Planned Costs (Storage Capacities, Crude Oil and Products Procurement and Operational Costs), Moldova, 2010-2020 × 1 000 € 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Oil products 0 39,510 912 53,592 2,128 41,638 3,040 42,550 3,952 48,071

Emergency Oil Stocks in the Energy Community Level 100 26 April 2011

Figure 52 Proposed Build-up of Emergency Stocks Formation in Moldova, 2012-2020

300 Oil products 250

200

150 x 1 000 t 000 1 x 100

0 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

9.8. Organizational Aspects of the Stockholding System Moldova should consider the best way of organising the oil stocks system and according to that formation of a relevant body that manage oil stocks. This could be an independent newly formed body or a body in existing governmental structure. 9.9. Intervention in Case of Supply Disruption There is no information on the legal framework for cases of supply disruptions in Moldova.

Moldova should create a legal framework and decision structure in case of oil supply disruption in conformity to its laws and propositions of Article 20 of the Directive 2009/119/EC. 9.10. Required Legislative Changes Moldova should design complete legal framework regarding the emergency oil stocks in compliance with the Directive 2009/119/EC. 9.11. Road Map In the Consultant’s opinion, Moldova needs to develop a complete system for emergency oil stocks storage and an envisaged timeline is presented below.

Emergency Oil Stocks in the Energy Community Level 101 26 April 2011

Figure 53 Road Map Gantt Diagram, Moldova

Emergency Oil Stocks in the Energy Community Level 102 26 April 2011

10. Montenegro Montenegro is a net importer of petroleum products. Most of the products are imported from Greece as the largest oil company Jugopetrol is owned by Hellenic Petroleum. Jugopetrol owns almost half of the petrol stations in Montenegro as well as a few stations in BiH and large storage capacities in the Port of Bar. 10.1. Crude Oil and Oil Product Supply and Demand The following figures provide a summary of the current and forecast position in Montenegro based on the methodology outlined in Section 3.1.

Figure 54 Petroleum Product Imports, Montenegro, 2007-2020

600

500

400

300 x 1000x t

200

100

0 2007 2008 2009 2010 2015 2020 LPG Motor gasoline Kerosene and jet fuel Gas/diesel oil Residual fuel oil Petrol coke Bitumen Lubricants

Emergency Oil Stocks in the Energy Community Level 103 26 April 2011

Figure 55 Domestic Consumption of Petroleum Products, Montenegro, 2007-2020

600

500

400

300 x 1 0001x t

200

100

0 2007 2008 2009 2010 2015 2020 LPG Motor gasoline Kerosene and jet fuel Gas/diesel oil Residual fuel oil Petrol coke Bitumen Lubricants

Figure 56 Oil Product Supply and Demand, Montenegro, 2007-2020

600

500

400

300 x 1000x t 200

100

0 Production Import Export Consumption

2007 2008 2009 2010 2015 2020

Emergency Oil Stocks in the Energy Community Level 104 26 April 2011

10.2. Emergency Oil Stock Obligation The following tables give the Consultants calculated emergency oil stocks obligation for Montenegro based on the methodology given in Section 3.2.

Table 76 Crude Oil Equivalent of Imports of Petroleum Products, Montenegro 2009- 2020 × 1 000 toe 2009 2010 2015 2020 Crude oil 0 0 0 0 LPG 16 18 22 24 Motor gasoline 69 72 75 76 Kerosene and jet fuel 0 0 1 1 Gas/diesel oil 193 205 238 277 Residual fuel oil 54 80 92 101 Petrol coke 17 35 46 47 Bitumen 3 16 36 35 Lubricants 1 1 1 1 Other 0 0 0 0 Total 353 426 511 562 Daily net imports 1.0 1.2 1.4 1.5

Table 77 90 Days of Daily Net Imports of Crude Oil and Petroleum Products, Montenegro, 2009-2020 × 1 000 toe 2009 2010 2015 2020 Crude oil 0 0 0 0 LPG 4 4 5 6 Motor gasoline 17 18 19 19 Kerosene and jet fuel 0 0 0 0 Gas/diesel oil 48 50 59 68 Residual fuel oil 13 20 23 25 Petrol coke 4 9 11 12 Bitumen 1 4 9 9 Lubricants 0 0 0 0 Other 0 0 0 0 Total 87 105 126 139

Emergency Oil Stocks in the Energy Community Level 105 26 April 2011

Table 78 Crude Oil Equivalent of Inland Consumption, Montenegro, 2009-2020 × 1 000 toe 2009 2010 2015 2020 Motor gasoline 78 81 85 86 Kerosene and jet fuel 0 0 1 2 Gas/diesel oil 217 231 268 312 Residual fuel oil 61 90 103 113 Total 357 401 457 513 Daily inland consumption 1.0 1.1 1.3 1.4

Table 79 61 Days of Average Daily Inland Consumption, Montenegro, 2009-2020 × 1 000 toe 2009 2010 2015 2020 Motor gasoline 13 13 14 14 Kerosene and jet fuel 0 0 0 0 Gas/diesel oil 36 39 45 52 Residual fuel oil 10 15 17 19 Total 60 67 76 86

Given the fact that Montenegro has no indigenous capacity for processing crude oil, it was assumed that the total of its stockholding obligation would be in the form of oil products (Table 80).

Table 80 Stockholding Obligations According to Average Daily Net Imports, Montenegro, 2010-2021 × 1 000 toe 2010 201 1 2016 2021 Petroleum products 87 105 126 139 Crude oil 0 0 0 0 Total 87 105 126 139 Days of net imports 90 90 90 90

Table 81 Proposed Composition of Compulsory Stocks, Montenegro, 2010-2021 × 1 000 t 2010 2011 2016 2021 Motor gasoline 17 19 21 21 Kerosene and jet fuel 0 0 0 0 Gas/diesel oil 49 55 68 77 Residual fuel oil 14 22 26 28 Crude oil 0 0 0 0 Total 80 96 116 127

On the basis of proposed composition of compulsory stocks, the required volume of storage to 2021 is shown in Table 82.

Emergency Oil Stocks in the Energy Community Level 106 26 April 2011

Table 82 Required Volume of Storage for Compulsory Stocks, Montenegro, 2010-2021 m3 2010 2011 2016 2021 Motor gasoline 23,279 25,843 28,538 28,317 Kerosene and jet fuel 106 189 399 548 Gas/diesel oil 57,782 65,900 80,629 92,150 Residual fuel oil 15,402 24,187 29,329 31,549 Crude oil 0 0 0 0 Total 96,569 116,120 138,895 152,565

10.3. Current Oil Infrastructure This section provides a summary of the Consultant’s understanding of the oil infrastructure within Montenegro.

Figure 57 Oil Infrastructure, Montenegro

There are no pipelines or refineries in Montenegro.

The total storage capacity is around 212,000 tons. Most storage facilities are located in three locations: Port of Bar, Lipci on the coast at Boka Kotorska Bay and Bijelo Polje in the northeast of Montenegro.

Emergency Oil Stocks in the Energy Community Level 107 26 April 2011

Table 83 Petroleum Products Storage Capacities, Montenegro Location Product Capacity (m 3) Motor gasoline 51,570 Bar Diesel and fuel oil 76,200 Motor gasoline 14,900 Lipci Diesel 7,600 Motor gasoline 6,500 Bijelo Polje Diesel 20,700 n/a 21,000* Airport Tivat Jet fuel 7,860 Airport Podgorica Jet fuel 410 Nikšić n/a 5,800 Podgorica LPG 310 Total 212,850 *military storage

About 10% of imported petroleum products are transported by road and the rest by tankers to the sea port of Bar.

The Port of Bar can accept large ships and tankers. The terminal for petroleum products in the port of Bar is comprised of two parts, old and new. The old berth is designed to receive ships up to 5,000 dwt while the new berth is designed for vessels up to 80,000 dwt. The new berth with three marine loading arms of 200 mm diameter with manual controls is today mainly used for unloading, due to market demands and size of tankers to deliver oil products. The old berth is only used for unloading of smaller ships and pleasure craft. 10.4. Emergency Oil Stock Current Situation Currently there are no strategic reserves of petroleum products or crude oil in Montenegro. 10.5. Additional Required Stockholding Capacities Montenegro Bonus is a company formed by the Government of Montenegro. It operates storage for oil and oil products, general cargo and pharmaceutical products. There is potentially 67,000 m 3 of tankage for oil products in three locations which could be utilised for emergency oil stocks. All three storage facilities need modernisation in order to comply with EU standards. Two of the three Montenegro Bonus oil product storage facilities are involved in a legal dispute but it is expected to be resolved in favour of Montenegro Bonus. It is therefore presumed that all Montenegro Bonus oil products tankage are going to be used to store emergency stocks, although legal issues might slow down the process of modernisation and use for emergency stockholding purposes. The rest of the stocks are presumed to be stored in leased storages of

Emergency Oil Stocks in the Energy Community Level 108 26 April 2011

companies active within the Montenegro market. Up to 2020, additional storage capacity of ~39,000 m 3 will be required. 10.6. Legal Review The new Energy Law approved by Parliament on 22 April 2010 (Official Gazette No. 0170/25) requires that strategic reserves of oil and petroleum products are equal to 90 days of average domestic consumption in the previous year. Management of strategic reserves is a public service which is to be carried out by a legal person established by the government. A fee for establishing, maintenance, and management of strategic reserves will be charged in accordance with a Government Regulation. Strategic reserves of oil and petroleum products may be stored in Montenegro or in other countries. A Decree on strategic reserves of oil products that will define the requirement of 90 days coverage is in the process of adoption by the Government. It will define the manner of formation, maintenance and management of strategic stocks of oil and oil products.

Strategic reserves of oil and petroleum products shall be ensured by legal persons selling to their customers at least 25 tonnes of crude oil or petroleum products in a previous year, and by new market participants, whose obligation is calculated on the basis of an estimate of sales in the first year of business operation, which shall be at least 50 tonnes of crude oil or petroleum products. According to Article 10 in the proposed Decree importers are required to provide the strategic reserves until 31 December 2021. The reserves are supposed to provide 10% per year of 90 days of average yearly consumption in Montenegro, starting from 31 December 2011.

The secondary legislation in place includes a rulebook concerning Licenses in the Energy Sector of Montenegro of 2004, amended in 2009 on commercial transport, storage and distribution, sale and supply of petroleum products. 10.7. Financial Aspects of Oil Stocks Energy Law Article 174 stipulates that for legal persons that sold to their customers at least 25 tonnes of crude oil or petroleum products in a previous year (for new market participants, the obligation is calculated on the basis of estimate of sale in the first year of business operation, which shall be at least 50 tonnes of crude oil or petroleum products) shall pay a charge for establishing, maintenance, and management of strategic reserves in accordance with the Government's regulation.

All financial aspects of oil stocks will be stipulated by the new Regulation on strategic oil stocks with the possibility of some supplementary legislation.

The total obligation of emergency stocks to be held in the period 20112021 (Table 80) increases and amounts to 139,000 toe in 2021. According to the

Emergency Oil Stocks in the Energy Community Level 109 26 April 2011

proposed structure of compulsory stocks it is necessary to ensure 161,000 m 3 of storage for petroleum products by 2020. It is estimated that in Montenegro, there are about 122,200 m 3 of storage capacity available for oil products. Accordingly, it is necessary to build an additional 38,800 m 3 of storage capacity for oil products (Table 84). Total investment in construction of new storage capacities and modernization of existing facilities is estimated at €15.8 million.

Table 84 Required Volume and Corresponding Investments in Storage, Montenegro, 2010-2020 Construction Modernisation m3 € m3 € Oil products 38,800 9,312,000 67,200 6,451,200

In accordance to the calculated total obligation up to 2021 Montenegro needs to invest in the purchase of petroleum products costing €59.6 million (Table 85).

Table 85 Needed Investment in Oil Products Purchase, Montenegro, 2010-2020 Tonnes € Oil products 127,140 59,612,701

In order to raise finance for emergency stocks formation in Montenegro, the Consultant recommends collection of fee paid by the producers and importers of petroleum products. As the petroleum products price is government regulated the cost of the stockholding system would be included in the retail price of motor fuels. The liable body should be responsible for collection of fees.

The scenario of modernization of existing storage capacity (Table 86), construction of new facilities (Table 87) and the formation or acquisition of stocks were defined for the purpose of calculating the compensation to be paid by importers and producers of petroleum products per each litre of gasoline, gas oil, residual fuel oil and LPG placed on the market of Montenegro. This results in costs that include investments in storage facilities, procurement of petroleum products and crude oil inventories, renewal of stocks as well as operational costs of the entire system (Table 88).

Table 86 Storage Tank Modernisation Plan, Montenegro, 2010-2020

m3 2012 2014 2016 2018 2020 Oil products 27,200 17,500 22,500 0 0

Emergency Oil Stocks in the Energy Community Level 110 26 April 2011

Table 87 Storage Tank Construction Plan, Montenegro, 2010-2020

m3 2012 2014 2016 2018 2020 Oil products 0 0 0 20,000 18,800

Table 88 Planned Costs (Storage Capacities, Crude Oil and Products Procurement and Operational Costs), Montenegro, 2010-2020

× 1000 € 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Oil products 0 13,227 413 16,730 983 25,586 1,857 14,463 2,161 12,990

With the defined scenario of emergency oil stocks formation (Figure 58) and forecast consumption of petroleum products in Montenegro, the average fee paid by the importers and manufacturers of petroleum products per each litre of gasoline, gas oil, residual fuel oil and LPG placed on the market would amount to 0.018 €/l. Such a fee ensures the formation of 90day supplies of oil and petroleum products by the year 2020 in Montenegro.

Figure 58 Proposed Build-up of Emergency Stocks Formation in Montenegro, 2011- 2020

160 Products 140

120

100

x 1000 t 1000 x 80

0 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

10.8. Organizational Aspects of the Stockholding System Management of strategic reserves is a public service which shall be carried out by a legal person established by the Government pursuant to the Energy Law. The Government would impose responsibility for managing oil stocks to an existing legal body or it would form a new body/agency that would perform that task.

Emergency Oil Stocks in the Energy Community Level 111 26 April 2011

10.9. Intervention in Case of Supply Disruption The Law on Emergency Procurement (Official Gazette No. 069/0329) regulates the procedure in the continuance of supply of the Montenegrin market with the products which are necessary for satisfying the basic needs of the population in conditions of serious market disruption that include natural disasters, direct conflict threat, blockade of Montenegro’s borders and other similar reasons that cannot be predicted.

The Government of Montenegro has adopted a plan for emergency procurement in conditions of serious market disturbances. The plan includes: directives, measures, actions, type, quantity and value of merchandise, as well as supply agent per municipality. Financial means for implementation of the plan are provided by the Ministry of Finance from the budgetary reserves upon prior consent of the Government. 10.10. Required Legislative Changes The Energy Law provides general propositions of strategic stocks and according to that Montenegrin Government should bring sublaws on emergency oil stocks which should comply with all propositions of Directive 2009/119/EC. Moreover, the method of calculation of the obligatory oil stocks in Energy Law should be changed to 90 days of average daily net imports according to Article 3 of the Directive and Annexes I, II and III. 10.11. Road Map Montenegro is progressing towards compliance with Directive 2009/119/EC and should continue along this path. Priority must be given to developing a suitable CSE body to oversee the build up, maintenance and reporting of emergency oil stocks. The Consultant’s envisaged timeline is given in Figure 59.

Emergency Oil Stocks in the Energy Community Level 112 26 April 2011

Figure 59 Road Map Gantt Diagram, Montenegro

Emergency Oil Stocks in the Energy Community Level 113 26 April 2011

11. Serbia The Serbian oil industry comprises of a large vertically integrated company (NIS) and several international and private companies. Russian GazpromNeft acquired 51% of NIS shares in 2008. NIS is the only company in Serbia with integrated exploitation, processing and sale of petroleum and petroleum products and natural gas exploitation, thus playing an important role in maintaining Serbia’s energy security. It supplies about 75% of the Serbian oil market. NIS exports motor fuel, benzene, toluene, construction and industrial bitumen to the EU, Ukraine, Croatia, Montenegro and BiH. 11.1. Crude Oil and Oil Product Supply and Demand The following figures provide a summary of the current and forecast position in Serbia based on the methodology outlined in Section 3.1.

Figure 60 Oil and Condensate Production, Serbia, 2007-2020

1.600

1.400

1.200

1.000

800 x 1 0001xt 600

400

200

0 2007 2008 2009 2010 2015 2020 Crude oil LPG Other condensate

Emergency Oil Stocks in the Energy Community Level 114 26 April 2011

Figure 61 Crude Oil Imports, Serbia, 2007-2020

5.000

4.500

4.000

3.500

3.000

2.500

x 1 0001xt 2.000

1.500

1.000

500

0 2007 2008 2009 2010 2015 2020 Crude oil

Figure 62 Net Production of Petroleum Products, Serbia, 2007-2020

6.000

5.000

4.000

3.000 x 1 000x1 t 2.000

1.000

0 2007 2008 2009 2010 2015 2020 LPG Motor gasoline Kerosene and jet fuel Naphtha Gas/diesel oil Residual fuel oil Petrol coke Bitumen Lubricants Other

Emergency Oil Stocks in the Energy Community Level 115 26 April 2011

Figure 63 Petroleum Product Imports, Serbia, 2007-2020

1.400

1.200

1.000

800

x1000 t 600

400

200

0 2007 2008 2009 2010 2015 2020 LPG Motor gasoline Kerosene and jet fuel Naphtha Gas/diesel oil Residual fuel oil Petrol coke Bitumen Lubricants Other

Figure 64 Petroleum Product Exports, Serbia, 2007-2020

2.500

2.000

1.500

x 1 0001xt 1.000

500

0 2007 2008 2009 2010 2015 2020 LPG Motor gasoline Kerosene and jet fuel Naphtha Gas/diesel oil Residual fuel oil Bitumen Lubricants Other

Emergency Oil Stocks in the Energy Community Level 116 26 April 2011

Figure 65 Domestic Consumption of Petroleum Products, Serbia, 2007-2020

5.000 4.500 4.000

3.500 3.000

2.500

x 1x000 t 2.000 1.500 1.000

500 0 2007 2008 2009 2010 2015 2020 LPG Motor gasoline Kerosene and jet fuel Naphtha Gas/diesel oil Residual fuel oil Petrol coke Bitumen Lubricants Other

Figure 66 Oil Products Supply and Demand, Serbia, 2007-2020

6.000

5.000

4.000

3.000

2.000

1.000 x 1x000 t

0 Production Import Export Consumption 1.000

2.000

3.000 2007 2008 2009 2010 2015 2020

Emergency Oil Stocks in the Energy Community Level 117 26 April 2011

11.2. Emergency Oil Stock Obligation The following tables give the Consultants calculated emergency oil stocks obligation for Serbia based on the methodology given in Section 3.2.

Table 89 Crude Oil Equivalent of Imports of Petroleum Products, Serbia, 2009-2020 × 1 000 toe 2009 2010 2015 2020 Crude oil 2,190 2,035 3,298 4,398 LPG 288 298 265 259 Motor gasoline 34 127 476 775 Kerosene and jet fuel 24 16 39 43 Gas/diesel oil 490 502 194 836 Residual fuel oil 123 22 230 3 Petrol coke 67 68 83 98 Bitumen 10 2 11 56 Lubricants 17 50 55 60 Other 2 64 12 65 Total 2,881 2,849 2,762 3,166 Daily net imports 7.9 7.8 7.6 8.7

Table 90 90 Days of Daily Net Imports of Crude Oil and Petroleum Products, Serbia, 2009-2020 × 1 000 toe 2009 2010 2015 2020 Crude oil 540 502 813 1,084 LPG 71 74 65 64 Motor gasoline 8 31 117 191 Kerosene and jet fuel 6 4 10 11 Gas/diesel oil 121 124 48 206 Residual fuel oil 30 6 57 1 Petrol coke 16 17 20 24 Bitumen 3 0 3 14 Lubricants 4 12 13 15 Other 0 16 3 16 Total 710 702 681 781

Emergency Oil Stocks in the Energy Community Level 118 26 April 2011

Table 91 Crude Oil Equivalent of Inland Consumption, Serbia, 2009-2020 × 1 000 toe 2009 2010 2015 2020 Motor gasoline 629 613 791 903 Kerosene and jet fuel 48 50 66 94 Gas/diesel oil 1,749 1,754 1,975 2,255 Residual fuel oil 684 695 722 707 Total 3,111 3,112 3,553 3,959 Daily inland consumption 8.5 8.5 9.7 10.8

Table 92 61 Days of Average Daily Inland Consumption, Serbia, 2009-2020 × 1 000 toe 2009 2010 2015 2020 Motor gasoline 105 102 132 151 Kerosene and jet fuel 8 8 11 16 Gas/diesel oil 292 293 330 377 Residual fuel oil 114 116 121 118 Total 520 520 594 662

Assuming Serbia would not make a commitment to maintain at least 30 days of specific stocks, then at least one third of its stockholding obligation has to be in the form of products (Table 93).

Table 93 Stockholding Obligation According to Average Daily Net Imports, Serbia, 2010-2021 × 1 000 toe 2010 2011 2016 2021 Petroleum products 237 234 227 260 Crude oil 474 468 454 520 Total 710 702 681 781 Days of net imports 90 90 90 90

Table 94 Proposed Composition of Compulsory Stocks, Serbia, 2010-2021 × 1 000 t 2010 2011 2016 2021 Motor gasoline 44 42 46 54 Kerosene and jet fuel 3 3 4 6 Gas/diesel oil 122 121 116 136 Residual fuel oil 48 48 42 43 Crude oil 543 537 520 596 Total 760 751 728 835

On the basis of the proposed composition of compulsory stocks, the required volume of storage until 2021 is given in Table 95.

Emergency Oil Stocks in the Energy Community Level 119 26 April 2011

Table 95 Required Volume of Storage of Compulsory Stocks, Serbia, 2010-2021 m3 2010 2011 2016 2021 Motor gasoline 58,497 56,400 61,749 72,566 Kerosene and jet fuel 4,447 4,531 5,076 7,460 Gas/diesel oil 145,349 144,007 137,690 161,742 Residual fuel oil 53,640 53,853 47,487 47,857 Crude oil 651,514 644,174 624,530 715,935 Total 913,446 902,965 876,534 1,005,560

11.3. Current Oil Infrastructure This section gives a summary of the Consultant’s understanding of the current oil infrastructure within Serbia.

Figure 67 Oil Infrastructure, Serbia

Crude oil imports (mainly from Russia) by tankers are brought in via the port of Omišalj in Croatia and further to refineries by the JANAF oil pipeline within Croatia and by Transnafta oil pipeline within Serbia. The capacity of the Transnafta pipeline is 9 million tons per year.

Emergency Oil Stocks in the Energy Community Level 120 26 April 2011

Table 96 Transnafta Pipeline Transportation System, Serbia Diameter Length Volume Route (from - to) (“) (km) (×1000 m 3) Dunav (Bačko Novo Selo) – 26 63,4 21,2 Novi Sad Novi Sad Pančevo 18 91 14,2

The strategic plans of JP Transnafta include development of a multiproduct pipeline system. The total length of the product pipeline is to be 321 km and the project is expected to start 2011 with the first phase of the project being completed by the end of 2013 and the complete system completed in 2016.

Altogether storage capacities in Serbia amount about 1.4 million m 3 supplied by rail, road and river.

There are two Serbian refineries in operation, Pančevo and Novi Sad. Pančevo is designed for a throughput of max. 4.8 Mt/y, while Novi Sad is designed for a throughput of a maximum of 2.5 Mt/y. The refineries are part of the oil company NIS whose main businesses are exploitation of oil and gas, processing and sale of petroleum and petroleum products. In 2008, Gazprom Neft acquired 51% of the shares of NIS. The company has its own retail network of 480 petrol stations and oil storage

Table 97 Crude Oil and Semi Products Storage Capacity, Serbia Location Product Total capacity (m 3) Crude oil 215,000 Pančevo Semi products 155,000 Crude oil 106,000 Novi Sad Semi products 72,000

Emergency Oil Stocks in the Energy Community Level 121 26 April 2011

Table 98 Petroleum Products Storage Capacities, Serbia

Location Product Capacity (m 3) Pančevo refinery Petroleum products 370,000 Novi Sad refinery Petroleum products 198,000 Zrenjanin LPG 6,200 Kovačica LPG 500 Kraljevo LPG 500 Mladenovac LPG 600 Odžaci LPG 1,500 Prokuplje LPG 2,300 Zaječar LPG 1,000 LPG 1,400 Motor gasoline 11,800 Beograd Jet fuel 5,600 Diesel 5,300 Gas oil 2,400 LPG 2,300 Čačak Motor gasoline 400 Diesel 10,100 LPG 7,500 Novi Sad Motor gasoline 11,500 Diesel 43,700 LPG 4,300 Subotica Diesel 16,000 LPG 1,300 Motor gasoline 4,500 Niš Jet fuel 200 Diesel 7,000 Gas oil 3,000 LPG 100 Bogatić Motor gasoline 100 Diesel 100 Motor gasoline 3,200 Smederevo Diesel 17,800 Motor gasoline 2,800 Prahovo Diesel 11,400 Gas oil 9,400 Motor gasoline 2,700 Požega Diesel 5,000 Crvenka Diesel 500 Barič Diesel 17,500 Motor gasoline 100 Sombor Diesel 200 Gas oil 300 Jagodina Motor gasoline 7,000 Motor gasoline 200 Kladovo Diesel 300 Motor gasoline 100 Svilajnac Diesel 100 Elemir Diesel 27,700 Motor gasoline 100 Kočani Diesel 100 Motor gasoline 2,000 Ada Huja Diesel 2,000 Doljevac Diesel 4,400 Ostružnica Diesel 13,000 Total 852,100

Emergency Oil Stocks in the Energy Community Level 122 26 April 2011

11.4. Emergency Oil Stock Current Situation Serbia holds emergency stocks in the form of motor gasoline, diesel fuel and fuel oil. At this moment the amount of products that are currently being held cannot be set out because they are decreed confidential as a state secret. Article 114 of the Energy Law stipulates that entities supplying consumers with oil derivatives and electrical power and heat producers which consume oil derivatives shall, in line with a special law (meaning other than Energy Law), ensure emergency reserves, and shall ensure operational reserves which are at minimum equal to the average fifteenday requirements of those consumers in the preceding year.

The more detailed conditions and the method for ensuring, using and replenishing the operational reserves of oil derivatives will be prescribed by bylaw of Energy Law.

Emergency reserves in future will be organized by new The Commodity Reserves Law.

Operational reserves (which is necessary for security of supply mainly electricity power and heat producers consuming oil derivatives) and Mandatory reserves (in accordance with directive) are a different kind of reserves. 11.5. Additional Required Stockholding Capacities A work program of the Directorate for Commodity Reserves for each year is adopted by the Government. In the last period it has increased the petroleum products storage capacities and the level of reserves in proportion to funds received from the state budget. For strategic reserves, three storage facilities are planned:

• Požega, for western Serbia • Smederevo, for central Serbia and Šumadija • Prahovo, for eastern Serbia

The storage capacities were increased to 32,700 m³ in Požega and the work program for 2010 envisages the rehabilitation of the storage capacity of 50,000 m³ in Smederevo which is planned to be reconstructed in the next two years. The Prahovo storage facility will be new. The Government is counting also on the capacities of NIS of which 49% is owned by the State.

The work program of 2010 allocated 900 million RSD for the purchase of petroleum products with the purpose of raising the level of emergency stocks.

Emergency Oil Stocks in the Energy Community Level 123 26 April 2011

JP Transnafta obtained a license for the storage of crude oil in two existing storage facilities of 10,000 m 3 at the terminal in Novi Sad, and plans to build 100,000 m 3 of storage capacity for crude oil in Novi Sad and Pančevo.

The Consultant estimates that of the existing storage capacities for petroleum products in Serbia, about 180,000 m 3 might be available for emergency stocks storage. Therefore, in order to ensure enough capacity for emergency stocks about 128,000 m 3 for oil products and 740,000 m 3 for crude oil has to be built by 2020. 11.6. Legal Review The Commodity Reserves Law (Official Gazette No. 18/92) regulates the formation, usage and renewal of commodity reserves that include the oil reserves. It also defines modes of building, maintenance and management of the reserves. In compliance with the Commodity Reserves Law, the Republic Directorate for Commodity Reserves takes care of all commodities reserves. A new Commodity Reserves Law is being drafted and it will include the emergency oil stocks.

The Energy Law (Official Gazette No. 84/04) regulates operational reserves that should be enough for 15 days of average consumption.

The new Commodity Reserves Law is expected to stipulate the organisation of emergency stocks and bodies responsible for emergency response planning and procedures. 11.7. Financial Aspects of Oil Stocks The draft of the new Commodity Reserves Law anticipates that energy entities will be required to pay a fee for financing the obligatory reserves system.

Total obligation of emergency stocks to be held in the period of 20112021 (Table 90) reaches an amount of 781,000 toe in 2021. According to the proposed structure of compulsory stocks (Table 94) it is necessary to ensure about 1 million m 3 of storage for crude oil and petroleum products by 2020. It is estimated that in Serbia, there is about 180,000 m 3 of storage capacity available for oil products. Accordingly, it is necessary to build an additional 117,000 m 3 of storage capacity for oil products and 720,000 m3 for crude oil (Table 99). Total investment in construction of new storage capacities is estimated to be €172 million.

Emergency Oil Stocks in the Energy Community Level 124 26 April 2011

Table 99 Required Volume and Corresponding Investments in Storage, Serbia, 2010- 2021 Construction m3 € Oil products 117.000 28.080.000 Crude oil 720.000 144.000.000 Total 837.000 172.080.000

In accordance to the calculated total obligation up to 2021 Serbia needs to invest €369.9 million in the purchase of petroleum products (Table 100).

Table 100 Required Investment in Oil Product Purchases, Serbia, 2010-2020 Tonnes € Oil products 238,550 113,701,457 Crude oil 596,374 256,291,015 Total 834,924 369,992,472

The proposed scenario for construction of new facilities (Table 101) and the of stocks was defined for the purpose of calculating the compensation to be paid by importers and producers of petroleum products per each litre of gasoline, gas oil, residual fuel oil and LPG placed on the market of Serbia. The proposed scenario results with costs that include investments in storage facilities, procurement of petroleum products and crude oil inventories, renewal of stocks as well as operational costs of the entire system (Table 105).

Table 101 Storage Tank Construction Plan, Serbia, 2010-2020

m3 2012 2014 2016 2018 2020 Oil products 45,000 45,000 27,000 0 0 Crude oil 150,000 150,000 150,000 150,000 120,000

Table 102 Planned Costs (Storage Capacities, Crude Oil and Products Procurement and Operational Costs), Serbia, 2010-2020

× 1000 € 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Oil products 0 28,643 684 29,327 1,368 18,554 1,778 1,778 1,778 1,778 Crude oil 0 85,977 2,280 88,257 4,560 90,537 6,840 92,817 9,120 77,902 Total 0 114,620 2,964 117,584 5,928 109,091 8,618 94,595 10,898 79,680

With the defined scenario of stocks formation (Figure 68) and forecast consumption of petroleum products in Serbia, the average fee paid by the importers and manufacturers of petroleum products per each litre of gasoline, gas oil, residual fuel oil and LPG sold on the market would amount to 0.013

Emergency Oil Stocks in the Energy Community Level 125 26 April 2011

€/l 4. Such a fee covers the costs of the formation of 90day supplies of oil and petroleum products by the year 2020.

Figure 68 Proposed Build-up of Emergency Stocks Formation in Serbia, 2011-2020

800 Crude oil Oil products 700

600

500

400

x 1 000 t x 000 1 300

200

100

0 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

In the case that Serbia would want to form the stocks of crude oil and oil products by the 2016 (as per some suggested targets), the average fee per each litre of gasoline, gas oil, residual fuel oil and LPG placed on the market would amount to maximum 0.019 €/l. 11.8. Organizational Aspects of the Stockholding System The Directorate’s department for nonfood commodities undertakes activities related to formation, maintenance, storage, territorial distribution of oil and oil products, management, use, and intervention with these goods in the market. The department also makes analysis, surveys and studies that serve as technical basis for the legal regulation of formation, maintenance, utilisation and territorial disposition of oil and oil products.

The draft Commodity Reserves Law will determine the organisational structure for holding and reporting of emergency stocks but the proposed structure is currently being revised.

11.9. Intervention in Case of Supply Disruption In the event of market disruption, caused by an interruption of supply the Republican Directorate for Commodity Reserves is supposed to intervene in the market under the Law on Commodity Reserves and the Government's decision. In case of taking necessary measures due to market disruption, the

4 The fee is calculated presuming that Serbia has no emergency stocks as the data on existing stocks was not available to the Consultant.

Emergency Oil Stocks in the Energy Community Level 126 26 April 2011

Directorate in line with ministries jointly have to do market analysis and propose possible measures to the Government, which makes the final decision on market reaction. 11.10. Required Legislative Changes Republic of Serbia is currently preparing a new Law on Commodity Reserves that would regulate emergency oil and oil products reserves in accordance with Directive 2009/119/EC. This Law should take into account: • The method of calculation of the obligatory oil stocks (90 days of average daily net imports) Article 3 of the Directive; Annexes I, II and III of the Directive • There is an obligation to submit statistical summaries of the level of emergency stocks on a regular bases for each month Article 12 and Annex IV of the Directive 2009/119/EC • There is an obligation to submit statistical summaries of the level of commercial stocks on a regular bases for each month Article 14 of the Directive 2009/119/EC • Biofuels can be taken into account when calculating stockholding obligation Article 16 of the Directive 2009/119/EC • The procedure in case of supply disruptions are to be refined to include the Commission and IEA in the process Article 20 of the Directive 2009/119/EC 11.11. Road Map Serbia, legally and organisationally, is well on the way to compliance with Directive 2009/119/EC. There are some relatively minor legislative changes to be made but the Consultant does not anticipate these being problematic or time consuming. There is a requirement for additional storage capacity building but this should be financeable under the existing bodies and with the measures outlined in this report. An envisaged timeline for compliance is set out in Figure 69. The Consultant believes that Serbia should be able to attain compliance with all facets of Directive 2009/119/EC by 2018 and certainly within the time frame of this study.

Emergency Oil Stocks in the Energy Community Level 127 26 April 2011

Figure 69 Road Map Gantt Diagram, Serbia

Emergency Oil Stocks in the Energy Community Level 128 26 April 2011

12. UNMIK UNMIK is a net importer of petroleum products. There is production of neither crude oil nor petroleum products in UNMIK. 12.1. Crude Oil and Oil Product Supply and Demand The following figures provide a summary of the current and forecast position in UNMIK based on the methodology outlined in Section 3.1.

Figure 70 Petroleum Product Imports, UNMIK, 2007-2020

1.000 900

800 700 600

500

x 1000x t 400

300 200

100 0 2007 2008 2009 2010 2015 2020 LPG Motor gasoline Kerosene and jet fuel Gas/diesel oil Residual fuel oil Petrol coke Bitumen Lubricants

Emergency Oil Stocks in the Energy Community Level 129 26 April 2011

Figure 71 Domestic Consumption of Petroleum Products, UNMIK, 2007-2020

1.000

900

800 700

600

500

x 1 0001x t 400

300

200

100

0 2007 2008 2009 2010 2015 2020 LPG Motor gasoline Kerosene and jet fuel Gas/diesel oil Residual fuel oil Petrol coke Bitumen Lubricants

Figure 72 Oil Product Supply and Demand, UNMIK, 2007-2020

1.000

900

800

700

600

500

x 1 0001x t 400

300

200

100

0 Production Import Export Consumption

2007 2008 2009 2010 2015 2020

12.2. Emergency Oil Stock Obligation In the following tables the Consultant calculates the emergency oil stocks obligation for UNMIK based on the methodology given in Section 3.2.

Emergency Oil Stocks in the Energy Community Level 130 26 April 2011

Table 103 Crude Oil Equivalent of Imports of Petroleum Products, UNMIK, 2009-2020 × 1 000 toe 2009 2010 2015 2020 Crude oil 0 0 0 0 LPG 47 48 66 70 Motor gasoline 98 84 114 128 Kerosene and jet fuel 21 19 29 34 Gas/diesel oil 257 261 313 387 Residual fuel oil 112 104 145 148 Petrol coke 35 47 45 64 Bitumen 50 43 83 91 Lubricants 6 6 9 12 Other 0 0 0 0 Total 627 610 804 933 Daily net imports 1.7 1.7 2.2 2.6

Table 104 90 Days of Daily Net Imports of Crude Oil and Petroleum Products, UNMIK, 2009-2020 × 1 000 toe 2009 2010 2015 2020 Crude oil 0 0 0 0 LPG 12 12 16 17 Motor gasoline 24 21 28 32 Kerosene and jet fuel 5 5 7 8 Gas/diesel oil 63 64 77 95 Residual fuel oil 28 26 36 37 Petrol coke 9 11 11 16 Bitumen 12 11 20 22 Lubricants 1 1 2 3 Other 0 0 0 0 Total 155 151 198 230

Table 105 Crude Oil Equivalent of Inland Consumption, UNMIK, 2009-2020 × 1 000 toe 2009 2010 2015 2020 Motor gasoline 110 95 129 144 Kerosene and jet fuel 24 22 33 38 Gas/diesel oil 290 294 353 436 Residual fuel oil 127 117 163 167 Total 551 527 678 785 Daily inland consumption 1.5 1.4 1.9 2.2

Emergency Oil Stocks in the Energy Community Level 131 26 April 2011

Table 106 61 Days of Average Daily Inland Consumption, UNMIK, 2009-2020 × 1 000 toe 2009 2010 2015 2020 Motor gasoline 18 16 22 24 Kerosene and jet fuel 4 4 6 6 Gas/diesel oil 48 49 59 73 Residual fuel oil 21 20 27 28 Total 92 88 113 131

Given the fact that UNMIK has no indigenous capacity for processing crude oil, it was assumed that the total of their stockholding obligation would be in the form of products (Table 107).

Table 107 Stockholding Obligation According to Average Daily Net Imports, UNMIK, 2010-2021 × 1 000 toe 2010 2011 2016 2021 Petroleum products 155 151 198 230 Crude oil 0 0 0 0 Total 155 151 198 230 Days of net imports 90 90 90 90

Table 108 Proposed Composition of Compulsory Stocks, UNMIK, 2010-2021 × 1 000 t 2010 2011 2016 202 1 Motor gasoline 28 25 35 39 Kerosene and jet fuel 6 6 9 10 Gas/diesel oil 75 77 95 117 Residual fuel oil 33 31 44 45 Crude oil 0 0 0 0 Total 142 138 182 211

On the basis of proposed composition of the compulsory stocks, the required volume of storage to 2021 is shown in Table 109.

Table 109 Required Volume of Storage for Compulsory Stocks, UNMIK, 2010-2021 m3 2010 2011 2016 2021 Motor gasoline 37.838 33 057 46,112 51,586 Kerosene and jet fuel 8.176 7.434 11,649 13,375 Gas/diesel oil 88.803 91.616 112,598 139,560 Residual fuel oil 36.680 34.339 49,160 50,355 Crude oil 0 0 0 0 Total 171.497 166.445 219,519 254,876

Emergency Oil Stocks in the Energy Community Level 132 26 April 2011

12.3. Current Oil Infrastructure The Consultant’s understanding of the current oil infrastructure is given in this section.

Figure 73 Oil Infrastructure

There no refineries or pipelines in UNMIK.

There is about 185,000 m 3 of petroleum product storage capacity in UNMIK, of which, 51,000 m 3 are storages of retail outlets. Most of the storage consists of small volume tankage and is used by private companies. The storage in Ferizaj, Mitrovice and Peje is publicly owned and might be used for emergency stockholding purposes in the future. The biggest storage is Snake Depot with 20,000 m 3 of capacity located in Bardosh near Pristina and operated by INA.

Storage located along the railway line receives petroleum products from refineries in the region (mostly OKTA) but others are supplied by road only.

Emergency Oil Stocks in the Energy Community Level 133 26 April 2011

Table 110 Storage Capacities for Oil Products Capacity Location Product (m³) Diesel fuel and motor gasoline 22,000 Fuel oil 4,500 Prishtine LPG 600 Jet fuel 300 Fushe Kosove/UNMIK Diesel fuel and motor gasoline 31,000 polje LPG 1,900 Diesel fuel and motor gasoline 2,000 Obiliq Fuel oil 2,000 Lipjan Diesel fuel and motor gasoline 4,000 Diesel fuel and motor gasoline 12,500 Fuel oil 1,000 Ferizaj/uroševac LPG 450 n/a *14,000 Diesel fuel and motor gasoline 3,500 Prizren Fuel oil 1,000 Suhareke LPG 350

Malisheve LPG 1,100

Diesel fuel and motor gasoline 2,000 Gjakovë/ðakovica Fuel oil 3,500 LPG 450 Diesel fuel and motor gasoline 2,000 Mitrovicë n/a *9,000 Drenas Fuel oil 2,000 Elez Hani Diesel fuel and motor gasoline 6,000 Gjilan Diesel fuel and motor gasoline 2,000 LPG 450 Peje n/a **2,000 Diesel fuel and motor gasoline 1,000 Other Fuel oil 1,000 LPG 200 Storages at retail Gas oil, motor gasoline, LPG 51,000 objects Total 184,800 * about 30% in operation; ** not in operation

UNMIK is landlocked and therefore most of the petroleum products are imported from the FYR Macedonia by rail and road. Imported petroleum products are transported 10% by rail and 90% by trucks.

Emergency Oil Stocks in the Energy Community Level 134 26 April 2011

12.4. Emergency Oil Stock Current Situation Currently there are no emergency stocks in accordance with Directive 2009/119/EC in UNMIK. 12.5. Additional Required Stockholding Capacities Considering the current rather low storage capacity for petroleum products UNMIK should build new storage. The required volume of storage in year 2016 amounts to 220,000 m 3, trending to 255,000 m 3 by 2021.

There is a possibility of using some of the existing capacities for emergency stockholding with a volume of about 34,000 m 3. 12.6. Legal Review The oil market structure is controlled by the Ministry of Trade and Industry through Administrative Direction No. 01/2010 which regulates the organisation and functioning of the Licensing Office for Regulation and Monitoring of the Oil Sector.

Emergency reserves of petroleum products are defined in the amended Law on Trade of Petroleum and Petroleum Products (Law No. 03/L138). All petroleum and petroleum product storage and sale points are obligated at any time to possess reserves of at least 5% of their storage capacity for state emergency purposes. In case of market disruption, the Minister of Trade and Industry through special legal acts can mandate a higher percentage for emergency reserves.

A draft Law on Emergency Oil Stocks Reserves is currently being prepared and should be adopted by the Assembly. The Law should be in compliance with Directive 2009/119/EC as it is going to be brought in by the end of 2012. 12.7. Financial Aspects of Oil Stocks The total obligation of emergency stocks to be held in the period of 20112021 (Table 107) increases and amounts to 230,000 toe in 2021. According to the proposed structure of compulsory stocks (Table 108), it is necessary to ensure 257,000 m 3 of storage for petroleum products by 2020. It is estimated that in UNMIK, there are about 34,000 m 3 of storage capacity available for oil emergency stockholding purposes. Accordingly, it is necessary to build additional 223,000 m 3 of storage capacity for oil products (Table 111). Total investment in construction of new storage capacities and modernisation of existing facilities is estimated at €56.8 million.

Emergency Oil Stocks in the Energy Community Level 135 26 April 2011

Table 111 Required Volume and Corresponding Investments in Storage, UNMIK, 2010- 2021 Construction Modernisation m3 € m3 € Oil products 223,000 53,520,000 34,000 3,264,000

In accordance to the calculated total obligation up to 2021 UNMIK needs to invest in the purchase of petroleum products in amount of €99.9 million (Table 112).

Table 112 Needed Investment in Oil Products Purchase, UNMIK, 2010-2020 Tonnes € Oil products 210,901 99,928,815

In order raise funds for emergency stocks formation in UNMIK the Consultant recommends collection of fee paid by the producers and importers of petroleum products. The liable body should be responsible for collection of fees.

The proposed scenario of modernisation of the existing storage capacity (Table 113), construction of new facilities (Table 114) and the acquisition of stocks were defined for the purpose of calculating the compensation to be paid by importers and producers of petroleum products per each litre of gasoline, gas oil, residual fuel oil and LPG sold on the UNMIK market. This covers the costs that include investments in storage facilities, procurement of petroleum products inventories, renewal of stocks as well as operational costs of the entire system (Table 115).

Table 113 Storage Tank Modernisation Plan, UNMIK, 2010-2020

m3 2012 2014 2016 2018 2020 Oil products 20,000 14,000 0 0 0

Table 114 Storage Tank Construction Plan, UNMIK, 2010-2020

m3 2012 2014 2016 2018 2020 Oil products 0 40,000 60,000 60,000 63,000

Table 115 Planned Costs (Storage Capacities, Crude Oil and Products Procurement and Operational Costs), UNMIK, 2010-2020

× 1000 € 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Oil products 0 2,224 304 27,231 1,125 39,180 2,037 40,092 2,949 42,907

Emergency Oil Stocks in the Energy Community Level 136 26 April 2011

With the defined scenario of stocks formation (Figure 74) and forecast consumption of petroleum products in UNMIK, the average fee paid by the importers and manufacturers of petroleum products per litre of gasoline, gas oil, residual fuel oil and LPG placed on the market would amount to 0.021 €/l. Such fee ensures the formation of 90day supplies of oil and petroleum products by the year 2020 in UNMIK.

Figure 74 Proposed Build-up of Emergency Stocks Formation in UNMIK, 2011-2020

250

Oil products

200

150

x 1 000 t 000 1 x 100

0 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

12.8. Organizational Aspects of the Stockholding System Currently, UNMIK does not have an established emergency stocks system. It would be necessary to form a CSE or relevant body under the jurisdiction of the Government of UNMIK that would execute the legal obligations stipulated in the Directive 2009/911/EC. The main obligations comprise tasks of providing required volume of storage capacities, purchase and maintenance of emergency stocks, and report of the state of stocks to the specified body. 12.9. Intervention in Case of Supply Disruption UNMIK should design a clear structural and procedural legal framework for the rapid response in case of supply disruption of petroleum products. 12.10. Required Legislative Changes There is a need to provide a complete legal framework covering formation, maintenance, financing and monitoring of emergency stocks, organisation of the emergency stockholding system as well as procedures for rapid response in case of supply disruption.

Emergency Oil Stocks in the Energy Community Level 137 26 April 2011

12.11. Road Map UNMIK needs to implement an entire stock holding system and construct storage facilities to hold the emergency stocks. The Consultants understand that legislation is currently being planned to meet Directive 2009/119/EC but there is a long way to go until compliance. An envisaged timeline is given in Figure 75 .

Emergency Oil Stocks in the Energy Community Level 138 26 April 2011

2011 2012 20132015 2014 20162018 2017 2019 2020

Figure 75 Road Map Gantt Diagram, UNMIK

Task Legal Develop regulatory framework/laws Enact relevant laws and regulations Organisational and Management Develop strategy and organisationks for managing stoc

Set up Central Stockholding Entity (as required) Develop stockholding obligations foranies operating (if required) comp

Development of Emergency Response Planning Development of Inventory monitoringystem and reporting s

Engineering Secure Engineering Budget

Assess and design additional tank capacity

Engineering design for additional tank capacity Tender for storage construction Build required additional tank capacity Stockbuilding Arrange financing for purchasing ofs emergency stock

Buildup emergency stocks Report compliance progress to the Energy Community

Emergency Oil Stocks in the Energy Community Level 139 26 April 2011

13. Georgia

Georgia has a small petroleum product market when compared to the other Observer countries of the Energy Community but the market is comparable in size to the Contracting Parties with a market of approximately 2.5 Mt/y in 2009 and expected to grow to approximately 2.9 Mt/y by 2020. Georgia has very limited domestic production of crude oil. Georgia did have a small 50 kt/y refinery but this was very old and ceased operation in 2005 and Georgia imports petroleum products to meet domestic consumption. A tender has recently been awarded for a feasibility and preliminary design of a 50 kt/y refinery, however PDC has not modelled any production from this refinery into the forward modelling as the Consultant believes that the refinery will not be completed and operational by 2020.

The Consultant believes that Georgia will remain dependent on imports yet Georgia is well placed to receive competitively priced imports of products via the Black Sea. Black Sea products are priced based on that of the Mediterranean market which is one of the most competitive markets for oil products globally due to the Black Sea being linked through the Dardanelles Strait to the Mediterranean.

Most imports are brought in through the ports of Poti and Batumi where there are capable and relatively modern handling facilities. This should in theory make for easier extension of facilities or building of facilities to hold emergency stocks. Any new facilities here will be well situated to receive imports of fuels and easily connect to existing infrastructure.

Emergency Oil Stocks in the Energy Community Level 140 26 April 2011

13.1. Crude Oil and Oil Product Supply and Demand The following figures provide a summary of the current and forecast position in Georgia based on the methodology outlined in Section 3.1.

Figure 76 Crude Oil Imports and Exports, Georgia, 2007-2020

Emergency Oil Stocks in the Energy Community Level 141 26 April 2011

Figure 77 Petroleum Product Imports, Georgia, 2007-2020

Figure 78 Domestic Consumption of Petroleum Products, Georgia, 2007-2020

Emergency Oil Stocks in the Energy Community Level 142 26 April 2011

Figure 79 Oil Product Supply and Demand, Georgia, 2007-2020

13.2. Emergency Oil Stock Obligations

To comply with the Directive, Georgia must hold the greater of 90 days of net imports or 61 days of inland consumption. In this case Georgia must hold the equivalent of 90 days of net imports

Table 116 Crude Oil Equivalent of Imports of Petroleum Products, Georgia, 2009-2020 × 1 000 toe 2009 2010 2015 2020 Crude oil 19 0 0 0 LPG 11 1 16 5 Motor gasoline 497 574 742 951 Kerosene and jet fuel 61 78 105 138 Gas/diesel oil 406 436 509 599 Residual fuel oil 0 0 0 0 Petrol coke 1 1 3 4 Bitumen 1,690 1,606 1,503 1,374 Lubricants 14 14 12 10 Other 0 0 0 0 Total 2,698 2,711 2,856 3,081 Daily net imports 7.4 7.4 7.8 8.4

Emergency Oil Stocks in the Energy Community Level 143 26 April 2011

Table 117 90 Days of Daily Net Imports of Crude Oil and Petroleum Products, Georgia, 2009-2020 × 1 000 toe 2009 2010 2015 2020 Crude oil 5 0 0 0 LPG 3 0 4 1 Motor gasoline 123 142 183 234 Kerosene and jet fuel 15 19 26 34 Gas/diesel oil 100 108 125 148 Residual fuel oil 0 0 0 0 Petrol coke 0 0 1 1 Bitumen 417 396 371 339 Lubricants 4 3 3 2 Other 0 0 0 0 Total 665 668 704 760

Table 118 Crude Oil Equivalent of Inland Consumption, Georgia, 2009-2020 × 1 000 toe 2009 2010 2015 2020 Motor gasoline 560 647 835 1,071 Kerosene and jet fuel 69 87 118 156 Gas/diesel oil 457 492 573 675 Residual fuel oil 0 0 0 0 Total 1,086 1,226 1,526 1,902 Daily inland consumption 3.0 3.4 4.2 5.2

Table 119 61 Days of Average Daily Inland Consumption, Georgia, 2009-2020 × 1 000 toe 2009 2010 2015 2020 Motor gasoline 94 108 140 179 Kerosene and jet fuel 11 15 20 26 Gas/diesel oil 76 82 96 113 Residual fuel oil 0 0 0 0 Total 181 205 255 318

Where 90 days of average daily net imports is greater than 61 days of average daily inland consumption, the stockholding obligation is calculated on the basis of average daily net imports.

Given the assumed lack of refining in Georgia, the Consultant recommends at this stage an emergency stock holding consisting of 100 percent product and the proposed constitution is set out below.

Emergency Oil Stocks in the Energy Community Level 144 26 April 2011

Table 120 Proposed Composition of Compulsory Stocks, Georgia, 2010-2020 × 1 000 toe 2009 2010 2015 2021 Motor gasoline 111 127 146 189 Kerosene and jet fuel 16 16 20 27 Gas/diesel oil 94 103 111 130 Residual fuel oil 0 0 0 0 Petroleum Coke 0 0 0 1 Bitumen 412 431 409 383 Lubricants 4 4 4 3 Other 0 0 0 0 Total 637 680 690 732

Table 121 Required Volume of Storage of Compulsory Stocks, Georgia, 2010-2021 m3 2009 2010 2011 2015 Motor gasoline 148,357 168,708 194,967 251,793 Kerosene and jet fuel 21,045 20,443 25,976 35,032 Gas/diesel oil 112,181 122,995 132,263 154,175 Residual fuel oil 0 0 0 0 Petroleum Coke 6 220 397 825 Bitumen 433,206 453,158 430,599 402,898 Lubricants 4,627 4,059 3,955 3,455 Other 0 0 0 0 Total 714,795 765,525 784,202 844,722

13.3. Current Oil Infrastructure This section provides a summary of the Consultant’s understanding of the current oil infrastructure within Georgia.

Emergency Oil Stocks in the Energy Community Level 145 26 April 2011

Figure 80 Oil Infrastructure

Source: PDC after CIA World Factbook

Georgia has two major ports, Batumi and Poti.

Batumi is at the terminus of the Caspian oil pipeline and is primarily an export terminal with a capacity of 18 million tonnes per annum. Poti has storage capacity for products 2.0 million tonnes per annum and crude of 1 million tonnes per annum.

Georgia currently has a total of 1,258 km of oil pipelines and has a rail capacity of handling some 5.2 million m 3of oil and petroleum products.

Table 122 Georgia Storage Capacity

Terminal Name Capacity (m 3) Product Access Batumi Oil Terminal Ltd. 581,650 PET, CRUDE Sea, Rail, Pipe Channel Energy Poti Oil Terminal 120,000 PET Sea, Rail SOCAR Kulevi Black Sea Terminal 380,000 PET, CRUDE Sea, Rail, Pipe Supsa Oil Terminal 160,000 CRUDE Sea, Pipe Source: www.tankfinder.com Key: PET = Petroleum Products

Emergency Oil Stocks in the Energy Community Level 146 26 April 2011

Figure 81 Map of Georgia Pipelines

Key: Red = Baku (Azerbaijan) Supsa Pipeline; Green = BakuTbilisiCeyan

The small (50,000 tonnes per year) refinery in Georgia has not functioned since 2005. There are currently tenders in circulation for design of a replacement refinery. Reaching operational capacity is, in the Consultants view, not likely within the time frame of this project. 13.4. Emergency Oil Stock Current Situation There are currently no legal arrangements or organisations for the holding of emergency oil stocks in Georgia. 13.5. Additional Required Stock Holding Capacities This is discussed below. 13.6. Legal Review Georgian currently does not have a legal regime for the holding of emergency oil stocks. 13.7. Financial Aspects of Oil Stocks

To calculate the investment requirement, largest calculated required volume of storage of each individual petroleum product in the period 20102020 was determined and rounded up to the nearest 5,000 m 3. The capacities were then multiplied by the cost per m 3 outlined in Section 3.3.

Emergency Oil Stocks in the Energy Community Level 147 26 April 2011

Table 123 Required Volume and Corresponding Investments in Storage, Georgia, 2010- 2020 Product m3 Capex ( €) Motor gasoline 325,000 78,000,000 Kerosene and jet fuel 50,000 12,000,000 Gas/diesel oil 185,000 44,400,000 Residual fuel oil 0 0 Other 60,000 14,400,000 Total 620,000 148,800,000

The above calculation assumes that there is a requirement to build new facilities for the emergency fuel stocks. There are already significant storage facilities within Georgia as detailed in Table 122 and it may be possible to class some of the stocks held for commercial purposes as emergency stocks and / or to utilise any spare capacity within the storage facilities to be lease for holding emergency stocks.

The required investment in the purchase of oil products is given in Table 124.

Table 124 Georgia Oil Product Purchase Tonnes € Products 346,299 98,357,136

In terms of overall costs for achieving compliance in 2020, the Consultant estimates that the cost can be applied to a fee charge to importers of petroleum products at a rate of 0.072 Euro per litre. 13.8. Organizational Aspects of the Stockholding System

There are currently no organisational procedures for emergency stocks within Georgia.

13.9. Intervention is Case of Supply Disruption

There are currently no intervention procedures for supply disruptions within Georgia.

13.10. Required Legal Changes Georgia needs to enact legislation that mandates the formation of emergency oil stocks, a body to own, maintain and manage the oil stocks and delegates power to an appropriate body to act in case of supply disruption.

Emergency Oil Stocks in the Energy Community Level 148 26 April 2011

13.11. Road Map Georgia is required to implement every step and process for compliance with Directive 2009/119/EC. Georgia, given the already significant storage capacity and terminal facilities within the country should look at ways of incentivising further tank construction by existing market players and leasing the capacity back to a stock holding agency and the existing players manage the stocks on behalf of the stock holding agency. The Consultant recommends that due to Georgia’s small market, the CSE should own the stocks as it would probably be too bigger burden on existing players to have to hold reserves of that quantity. An envisaged timeline is presented in Figure 82.

Emergency Oil Stocks in the Energy Community Level 149 26 April 2011

2011 2012 20132015 2014 20162018 2017 2019 2020

Figure 82 Road Map Gantt Georgia

Task Legal Develop regulatory framework/laws Enact relevant laws and regulations Organisational and Management Develop strategy and organisationks for managing stoc

Set up Central Stockholding Entity (as required) Develop stockholding obligationsanies (iffor required) operating comp

Development of Emergency Response Planning Development of Inventory monitoringystem and reporting s

Engineering Secure Engineering Budget

Assess and design additional tank capacity

Engineering design for additional tank capacity Tender for storage construction Build required additional tank capacity Stockbuilding

Arrange financing for purchasings of emergency stock

Buildup emergency stocks Report compliance progress to the Energy Community

Emergency Oil Stocks in the Energy Community Level 150 26 April 2011

14. Turkey

Turkey is a relatively advanced country in terms of energy security and planning for supply interruptions with detailed plans laid out. Much of this comes from Turkey being a member of the IEA and has also in the past complied with European laws on emergency oil stocks.

Turkey is net importer of oil products and energy. Whilst Turkey has significant refining capacity, much of this is not fully utilised. Many of the refineries are not suited to the existing market within Turkey and produce too much gasoline and fuel oils to meet existing trends and the Consultant predicts this is likely to continue.

The underutilised capacity however does have its advantages in that it gives Turkey the flexibility of being able to utilise capacity to increase refining of products and gives Turkey the advantage of being able to hold emergency stocks in the form of crude oil. However, even though this strategy of maintaining stocks of crude oil is potentially cheaper than purchasing additional emergency stock as product, there may be further problems with emergency response planning as the Turkish refineries are limited in what they can produce.

There are detailed emergency and contingency plans in place within Turkey that are reviewed as adequate by the IEA should a supply interruption arise. 5

5 Note: There has been a lack of timely response from Turkey to the consultant’s questionnaire and inquiries and as a result reliance has been put on other data sources.

Emergency Oil Stocks in the Energy Community Level 151 26 March 2011

14.1. Crude Oil and Oil Product Supply and Demand The following figures provide a summary of the current and forecast position in Turkey based on the methodology outlined in Section 3.1.

Figure 83 Crude Oil Supply, Turkey, 2008-2020

Figure 84 Petroleum Product Production, Turkey, 2008 - 2010

Emergency Oil Stocks in the Energy Community Level 152 26 March 2011

Figure 85 Petroleum Products Balance, Turkey, 2007-2020

Figure 86 Domestic Consumption of Petroleum Products, Turkey, 2007-2020

Emergency Oil Stocks in the Energy Community Level 153 26 March 2011

Figure 87 Oil Product Supply and Demand, Turkey, 2007-2020

14.2. Emergency Oil Stock Obligation

To comply with Directive 2009/119/EC, Turkey must hold the greater of 90 days of net imports or 61 days of inland consumption. In this case Turkey must hold the equivalent of 90 days of net imports

Table 125 Crude Oil Equivalent of Imports of Petroleum Products, Turkey, 2009-2020 × 1 000 toe 2009 2010 2015 2020 Crude oil 13,273 13,116 21,684 23,398 LPG 3,205 3,515 4,152 4,285 Gasoline 1,509 1,373 755 820 Jet/Other Kero sene 1,429 1,526 2,658 2,772 Diesel/Gasoil 828 911 429 594 Fuel Oil 9,858 10,282 10,244 12,608 Other Products 1,311 1,370 2,249 2,732 Total 28,554 29,043 32,358 36,201 Daily net imports 78.2 79.6 88.7 99.2

Emergency Oil Stocks in the Energy Community Level 154 26 March 2011

Table 126 90 Days of Daily Net Imports of Crude Oil and Petroleum Products, Turkey, 2009-2020 × 1 000 toe 2009 2010 2015 2020 Crude oil 3,273 3,234 5,347 5,769 LPG 790 867 1,024 1,057 Gasoline 372 339 186 202 Jet/Other Kerosene 352 376 655 684 Diesel/Gasoil 204 225 106 147 Fuel Oil 2,431 2,535 2,526 3,109 Other Products 323 338 555 674 Total 7,041 7,161 7,979 8,926

Table 127 Crude Oil Equivalent of Inland Consumption, Turkey, 2009-2020 × 1 000 toe 2009 2010 2015 2020 Motor gasoline 2,663 2,312 2,279 2,247 Kerosene and jet fuel 3,182 3,247 3,580 3,913 Gas/diesel oil 16,610 16,943 20,048 23,153 Residual fuel oil 3,032 3,227 3,248 3,270 Total 25,487 25,730 29,156 32,582 Daily inland consumption 69.8 70.5 79.9 89.3

Table 128 61 Days of Average Daily Inland Consumption, Turkey, 2009-2020 × 1 000 toe 2009 2010 2015 2020 Motor gasoline 445 386 381 375 Kerosene and jet fuel 532 543 598 654 Gas/diesel oil 2,776 2,832 3,350 3,869 Residual fuel oil 507 539 543 547 Total 4,259 4,300 4,873 5,445

Where 90 days of average daily net imports is greater than 61 days of average daily inland consumption, the stockholding obligation is calculated on the basis of average daily net imports.

Emergency Oil Stocks in the Energy Community Level 155 26 March 2011

Table 129 Proposed Composition of Compulsory Stocks, Turkey, 2009-2020 × 1 000 toe 2009 2010 2015 2020 Motor gasoline 225 197 191 188 Kerosene and jet fuel 269 276 299 328 Gas/diesel oil 1,402 1,441 1,676 1,938 Residual fuel oil 256 274 272 274 Crude oil 5,378 5,470 6,095 6,819 Total 7,530 7,659 8,533 9,546

Table 130 Required Volume of Storage of Compulsory Stocks, Turkey, 2009-2020 m3 2009 2010 2015 2020 Motor gasoline 299,683 262,148 254,122 250,778 Kerosene and jet fuel 353,351 363,390 393,879 430,952 Gas/diesel oil 1,669,108 1,715,402 1,995,668 2,307,322 Residual fuel oil 287,579 308,335 305,197 307,579 Crude oil 6,402,693 6,512,331 7,255,733 8,117,567 Total 9,012,413 9,161,606 10,204,599 11,414,198

14.3. Current Oil Infrastructure This section provides a summary of the Consultant’s understanding of the current oil infrastructure within Turkey.

Figure 88 Existing Infrastructure

Source: PDC after CIA World Fact Book

Emergency Oil Stocks in the Energy Community Level 156 26 March 2011

Turkey has a total of 3,332 km of oil pipelines. There are two major cross border pipelines running within Turkey: the Iraq Turkey pipeline and the Baku–Tbilisi–Ceyhan pipeline both of which terminate at a Mediterranean port and give access to the Mediterranean market for Caspian and Middle Eastern oil.

Table 131 Storage Capacity

Terminal Name Capacity (m 3) Products Access Alpet Aliaga 68,000 PET Road, Sea Alpet Izmit 16,460 PET Sea Alpet Mersin 94,847 PET Sea Alpet Samsun 46,950 PET Road, Sea Altintel Tank 45,000 PET, CHEM Sea Anadolu Uluslararasi Mt Selin 31,200 PET Road, Sea Arkem Kimya GebzeDilovasi Tank 45,000 PET Sea Arkem Kimya Yumurtalik 100,000 PET, CHEM Road, Sea ATAS Refinery 570,000 PET Sea Aves Mersin 117,600 PET, VEG Sea Balpet 57,000 PET Road, Sea Botas Ceyhan Tanker 1,770,000 CRUDE Pipe, Sea Cekisan Antalya 36,805 PET Pipe, Sea PET, GAS, Cekisan Cekmece 75,000 CRUDE Sea Cekisan Iskenderun 18,500 PET Pipe, Sea Delta Akdeniz Dörtyol 625,000 PET, CRUDE Road, Sea EUROIL Mersin 65,160 PET Road, Sea PET, CHEM, Kiraz Guchan Tank 21,952 VEG Road, Sea Kiraz Yalin Tank 22,709 PET, CHEM Rail, Road, Sea Limas Liman Isletmeciligi 31,700 PET Road, Sea Lukoil Eurasia Petrol – Aliaga 14,734 PET Sea Lukoil Eurasia Petrol – Batman 5,116 PET Road Lukoil Eurasia Petrol – Hatay 84,329 PET Road, Sea Lukoil Eurasia Petrol – Hopa 13,000 PET Pipe, Sea Lukoil Eurasia Petrol Kirikkale 19,400 PET Road Lukoil Eurasia Petrol Kocaeli 32,000 PET Sea Lukoil Eurasia Petrol – Mersin 16,800 PET Road, Sea M Oil Antalya Dolum Tesisi 33,300 PET Sea Opet Aliaga 66,000 PET Pipe, Sea, Road Opet Giresun 43,130 PET Road, Sea Opet Konya Depot 1,526 PET Road

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Terminal Name Capacity (m 3) Products Access Opet Korfez 37,500 PET Pipe, Sea, Road Opet Marmara 453,000 PET Road, Sea Opet Mersin 248,000 PET Rail, Road, Sea Orka Tank 12,000 PET, CRUDE Road, Sea Petline Izmir (Korfez) Facility 21,000 PET Sea Petline Kirikkale Storing Facility 57,000 PET Road Petline Trakya 198,300 PET Pipe, Road, Sea Petrol Ofisi Aliaga s 165,325 PET Sea Petrol Ofisi Antalya s 108,919 PET Sea Petrol Ofisi Derince 184,000 PET Sea Petrol Ofisi Haramidere s PET Petrol Ofisi Iskenderun s PET Petrol Ofisi Istanbul s 973,760 PET Pipe, Road, Sea Petrol Ofisi Mudanya s 20,150 PET Sea Petrol Ofisi Samsun s 54,289 PET Sea Petrol Ofisi Trabzon s 78,427 PET Sea Poliport Kimya Sanayi ve Ticaret A.S. 140,000 PET, CHEM Pipe, Road, Sea Soil Black Sea 140,200 PET, VEG Sea Soil Mersin 96,400 PET Road, Sea PET, CHEM, Solventas Teknik Depolama A.S. 220,000 VEG Road, Sea PET, CHEM, Toros Ceyhan 247,427 VEG, GAS Road, Sea Total Gebze i 94,950 PET Sea Total Haramidere 39,500 PET Sea Turcas Aliaga s 11,150 PET Road, Sea Turcas Ambarli s 66,014 PET Sea Turcas Korfez s 16,000 PET Sea Turkuaz & Zulfikarlar Chemical Yarimca 39,185 PET, CHEM Pipe, Sea Yilport Konteyner i ve Liman Isletmeleri 120,000 PET, CHE, VEG Pipe, Road, Sea Source: Tankerterminals.com

Turkey’s four existing refineries are dominated by Tupras and are relatively large with a total capacity of 28.1Mt per year (567 kb/d), but have low utilisation rates which the Consultant estimates to be approximately 60% going forward. The refineries are also poorly matched with the Turkey’s current demand scenario and this is likely to continue to be the case going forward to 2020.

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Figure 89 Refineries Refinery Owner Capacity bbl/day (m 3/d) Central Anatolian Tupras 100,000 (16,000) Izmit Tupras 220,000 (35,000) Aliaga Tupras 220,000 (35,000) Batman Tupras 22,000 (3,500) Aliaga (Due 2014) Petkim 214,000 (34,000)

14.4. Emergency Stock Holding Current Situation Stock holding is governed under the 2003 Petroleum Market Law. The Law sets out requirements for coverage of inland consumption based on the EU directives and currently requires that 90 days of net imports are held.

The stocks are required to consist of obligatory industry stocks and new established stocks to make up the requirement to 90 days from previous requirements laid out by previous EU Directives and IEA requirements.

Industry participants are required to hold stocks as per the schedule set out in Table 132. Table 132 Turkish Industry Stock Holding Requirements Industry Type Required Holding ( previ ous year average days) Refineries 20 Fuel Distributors 20 LPG Distributors 10 Large consumers (20,000 t/y) 15

It is the intention to build additional stocks to make up the shortfall of the above mention industry participants to 90 days. 14.5. Additional Required Stock Holding Capacity The consultant currently does not have a full break down of Turkey’s existing emergency stock holding capacity it has been assumed that the total stock holding capacity and stocks will have to be built up over an 8 year period starting in 2012. (See Table 133 for breakdown of requirements). 14.6. Legal Review The Consultant understands that there are currently studies being undertaken and laws are currently being drafted to comply with Directive 2009/119/EC but this is not available but the Consultant understands that the new laws should comply with Directive 2009/119/EC.

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14.7. Financial Aspects of Oil Stocks Table 133 Required Volume and Corresponding Investments in Storage, Turkey, 2010- 2020 Products Capacity (m 3) Investments ( €) Motor gasoline 320,000 76,800,000 Kerosene and jet fuel 435,000 104,400,000 Gas/diesel oil 2,310,000 554,400,000 Residual fuel oil 310,000 74,400,000 Crude oil 8,120,000 1,948,800,000 Total 11,495,000 2,7 58,800,000

The above calculation assumes that there is a requirement to build new facilities for the emergency fuel stocks. There are already significant storage facilities within Turkey as detailed in Table 122 and it may be possible to class some of the stocks held for commercial purposes as emergency stocks and / or to utilise any spare capacity within the storage facilities.

Total stock purchase capital expenditure is estimated by the Consultant to be 4.8 billion Euros. Given the assumed annual consumption over the time period, Turkey potentially should level a charge of 0.022 Euro per litre of liquid fuel sold. 14.8. Organizational Aspects of the Stockholding System The Turkish National Emergency Sharing Organisation (NESO) which is in place to coordinate responses to energy supply restrictions is chaired by the Undersecretary of the Ministry of Energy and Natural Resources and includes members of the major oil companies, the Energy Market Regulatory Authority and can be expanded to include other ministries such as transport as required. As such, NESO potentially has wide ranging powers including the ability to relax fuel standards to increase refinery output, call for increased domestic production and allocate fuel to particular entities. NESO expects to be able to utilise the capability of Tupras, the formerly State own refining company with a dominant positions in Turkish refining and product retail to be beneficial in terms of logistics and communications should a supply interruption occur. 14.9. Intervention in Case of Supply Disruption Intervention in case of supply interruption is set out in the Petroleum Market Law and the constitution of NESO and is compliant with international best practise and IEA and EU requirements of only countering physical supply interruptions and not a method of price control.

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14.10. Road Map Turkey is well advance with regards to its maintenance of oil stocks and has previously been compliant with IEA regulation. With minor legislative changes and some additional storage capacity building, Turkey should be compliant with the new directive by 2020 and may well be compliant by or before 2016 as set out in an envisaged time line in Figure 90.

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Figure 90 Road Map Gantt Diagram, Turkey

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15. Ukraine The Ukraine has a long history of oil and gas production and refining and has some legal provisions for oil stocks. The Consultant’s forecasts for the Ukraine indicated that it will be a country that is increasingly reliant on imports of both product and crude to meet oil product demand. The country’s oil production is forecast by the Consultant to plateau even with the opening up to foreign oil companies, access to newer technology and increased investment in the Ukraine’s oil fields as the Consultant believes this is more a case of arresting decline rather than bringing on new production.

Details of the emergency oil stocks arrangements are classified as a State secret and so not disclosed despite efforts by the Consultant to gain access to this information. As such, the analysis presented in this section is incomplete and not likely to accurately reflect the true situation within oil and oil product supply and demand. 6 15.1. Crude Oil and Oil Product Supply and Demand The following figures provide a summary of the current and forecast position in the Ukraine based on the methodology outlined in Section 3.1.

Figure 91 Crude Oil Supply, Ukraine, 2008-2020

6 Note: There has been a lack of response from the Ukraine to the consultant’s questionnaire and inquiries and as a result reliance has been put on other data sources.

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Figure 92 Petroleum Product Production, Ukraine, 2008 - 2010

Figure 93 Petroleum Products Balance, Ukraine, 2007-2020

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Figure 94 Domestic Consumption of Petroleum Products, Ukraine, 2007-2020

Figure 95 Oil Product Supply and Demand, Ukraine, 2007-2020

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15.2. Emergency Oil Stock Obligation

To comply with the Treaty, Ukraine must hold the great of 90 days of net imports or 61 days of inland consumption. In this case Ukraine must hold the equivalent of 90 days of net imports

Table 134 Crude Oil Equivalent of Imports of Petroleum Products, Ukraine, 2009-2020 × 1 000 toe 2009 2010 2015 2020 Crude oil 13,273 13,116 21,684 23,398 LPG 77 94 53 37 Gasoline 64 60 62 75 Jet/Other Kerosene 1,688 1,651 2,459 3,503 Diesel/Gasoil 82 71 8 47 Fuel Oil 2,012 2,114 3,004 4,199 Other Products 2,081 2,145 2,381 2,375 Total 14,796 14,631 24,784 28,809 Daily net imports 40.5 40.1 67.9 78.9

Table 135 90 Days of Daily Net Imports of Crude Oil and Petroleum Products, Ukraine, 2009-2020 × 1 000 toe 2009 2010 2015 2020 Crude oil 3,273 3,234 5,347 5,769 LPG 19 23 13 9 Gasoline 16 15 15 18 Jet/Other Kerosene 416 407 606 864 Diesel/Gasoil 20 18 2 12 Fuel Oil 496 521 741 1,035 Other Products 513 529 587 586 Total 3,648 3,608 6,111 7,104

Table 136 Crude Oil Equivalent of Inland Consumption, Ukraine, 2009-2020 × 1 000 toe 2009 2010 2015 2020 Motor gasoline 5,964 5,895 7,078 8,261 Kerosene and jet fuel 298 342 413 484 Gas/diesel oil 6,503 6,719 7,936 9,152 Residual fuel oil 713 719 728 737 Total 13,478 13,675 16,155 18,634 Daily inland consumption 36.9 37.5 44.3 51.1

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Table 137 61 Days of Average Daily Inland Consumption, Ukraine, 2009-2020 × 1 000 toe 2009 2010 2015 2020 Motor gasoline 997 985 1,183 1,381 Kerosene and jet fuel 50 57 69 81 Gas/diesel oil 1,087 1,123 1,326 1,530 Residual fuel oil 119 120 122 123 Total 2,252 2,285 2,700 3,114

Table 138 Proposed Composition of Compulsory Stocks, Ukraine, 2009-2020 × 1 000 toe 2009 2010 2015 2020 Motor gasoline 493 475 818 962 Kerosene and jet fuel 25 28 48 56 Gas/diesel oil 538 542 917 1,066 Residual fuel oil 59 58 84 86 Crude oil 2,787 2,756 4,668 5,426 Total 3,902 3,858 6,536 7,597

Table 139 Required Volume of Storage of Compulsory Stocks, Ukraine, 2009-2020 m3 2009 2010 2015 2020 Motor gasoline 657,681 633,558 1,090,844 1,282,989 Kerosene and jet fuel 32,480 36,241 62,806 74,212 Gas/diesel oil 640,291 644,774 1,092,010 1,269,131 Residual fuel oil 66,232 65,146 94,569 96,456 Crude oil 3,317,667 3,280,661 5,557,503 6,459,997 Total 4,714,350 4,660,381 7,897,733 9,182,785

15.3. Current Oil Infrastructure This section provides an overview of the Consultant’s understanding of the current infrastructure within the Ukraine.

Table 140 Ukraine Ports & Terminals Port Terminal Commodity Capacity Yuzhny Pivdenny Crude Oil Crude Load ~7500 tonnes Terminal per hour Ilyichevsk Ilyichevsk Fuel Fuels 3.2 million tonnes Terminal per year Odessa Odessa oil and gas Crude and products 25 million tonnes Terminal per year Source: Tankerterminals.com

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Ukraine has a total of 4,514 km oil pipelines and 4,211 km of refined products pipelines (2009 data).

Table 141 Storage Capacity

Capacity Terminal Name (m 3) Products Access Pipe, Road, Sea, Eximnefteproduct Terminals 1 & 2 474,000 PET, CRUDE Rail Feodosia Oil Terminal 280,000 PET, CRUDE Rail, Sea PET, CHEM, GAS, CRUDE, Illichivsk Fuel Terminal 72,160 VEG Rail, Sea Odesnefteprodukt 147,000 PET, CRUDE Road, Rail, Sea Oil Company Alliance Terminal Yugtorsan 135,000 PET, CRUDE Pipe, Sea, Rail Oil Terminal Yuzhny (Pyvdenniy) 200,000 CRUDE Sea, Pipe Reni Oil Terminal 75,000 PET, CRUDE Sea, Rail Transbunker Yuzhny Oil Terminal 80,000 PET Sea, Rail, Road TransbunkerDunay 2,400 PET Sea, Rail, Road Triton Petrol Limited S.A. 9,000 PET Sea, Rail, Road Source: Tankerterminals.com

Ukraine has a total of 1.475 million m 3 of storage capacity which is a long way short of the required ~14.3 million m 3. The consultant believes this volume of tankage to be considerably understated in this report due to the laws regarding the secrecy of Ukraine’s Emergency Oil Stocks.

Ukraine has a long history of oil production and refining, however, many of Ukraine’s refineries are old and require capital injection and modernisation to operate competitively and to EU standards producing EU compliant fuels.

Table 142 Refineries Refinery Owner Capacity bbl/day (m 3/d) Odessa LUKOIL 70,000 (11,000) Linos TNKBP 320,000 (51,000) Kherson Alliance 36,000 (5,700) Kremenchug Ukrtatnafta 368,500 (58,600) Drogobych Pryvat 40,000 (6,400) Neftekhimik Prikarpatya Nadvirna Pryvat 39,000 (6,200) Source: Tankerterminals.com

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15.4. Emergency Stock Holding Situation Ukraine currently is creating strategic reserves to comply with the IEA requirements for 90 days of net import coverage. This is being undertaken by the State Committee of Material Reserve (Derzhkomreserv) which was first created in 1992. The current situation is one where there is a lack of transparency as emergency oil reserves are still viewed as a state secret. The most recent IEA review of policy notes that there is consideration for compelling distribution companies to hold 60 or 90 day stocks. Ukraine currently has a stockholding but this is classed as military stocks and therefore is not accruable under IEA or EU directives towards emergency oil stocks. 15.5. Additional Capacity Requirements Since the Ukraine does no release information on its emergency stocks storage, no analysis has been made. 15.6. Legal Review There is insufficient information to analyse the readiness to adapt the Acquis. 15.7. Financial Aspects of Oil Stocks Table 143 Required Volume and Corresponding Investments in Storage, Ukraine 2010- 2020 Products Capacity (m 3) Investments ( €) Motor gasoline 1,285,000 308,400,000 Kerosene and jet fuel 75,000 18,000,000 Gas/diesel oil 1,270,000 304,800,000 Residual fuel oil 135,000 32,400,000 Crude oil 6,460,000 1,550,400,000 Total 9,225,000 2,214,000,000

The above calculation assumes that there is a requirement to build new facilities for the emergency fuel stocks. There are already significant storage facilities within Ukraine as detailed in Table 122 and it may be possible to class some of the stocks held for commercial purposes as emergency stocks and / or to utilise any spare capacity within the storage facilities.

The required capital expenditure for commodity purchase is given below and the estimated fuel fee for building up emergency stocks is €0.05 per litre of retail fuel based on a five year build up and 2015 consumption levels. Table 144 Commodity Purchase Capital Expenditure, Ukraine € Products 1,094,218 Crude 2,331,987

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15.8. Organisational Aspects of the Stockholding System Derzhkomreserv reserve is responsible for the organisation of the stock holding system but details of the organisation have not been disclosed. 15.9. Intervention in Case of Supply Disruption The plans for intervention in cases of supply interruption are understood by the Consultant to be in existence but are not disclosed. 15.10. Required Legislative Changes Since the Consultant does not have the existing legislation, no comment can be made on necessary changes 15.11. Road Map The Ukraine already has many of the requirements to hold emergency oil stocks in compliance with Directive 2009/119/EC, it is mainly a question of align required holding levels and disclosure. The Consultant does not anticipate difficulties in attracting investment into Ukraine’s oil sector. An envisaged timeline is detailed in Figure 96.

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Figure 96 Road Map Gantt2011 Diagram, Ukraine 2012 20132015 2014 2016

Task Legal Amend laws on commodity resevers to 9/119/ECcomply with 200 Organisational and Management Engineering Secure Engineering Budget Assess and design additional tank capacity Engineering design for additional tank capacity Tender for storage construction Build required additional tank capacity Stockbuilding Arrange financing for purchasing of emergencys stock Buildup emergency stocks Report compliance progress to the Energy Community

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16. Regional Approach

16.1. Introduction The European Council underlined the need to enhance security of supply for the EU as a whole and for each member state in its energy policy. Therefore, Council Directive 2009/119/EC introduces convergence between the EU oil supply security system and IEA system. These two systems promote integrated actions in order to secure energy supply to all Member States.

A regional approach can enhance actions to provide energy security; it is not limited to storage of stocks in neighbouring country but can extend to cooperation on emergency response system based on regional agreements. Such agreements should arrange coordinated use of stockdraw and other measures in response to disruptions in oil supplies. Stockholding agreements are potentially very important for the Energy Community region due to high level of market interaction among the Beneficiaries.

16.2. Regulation

The regional arrangements are dependent on strong bilateral arrangements. It is the Consultant’s finding that the IEA intent for emergency oil stocks is one of self reliance in terms of supply disruptions.

It is the Consultant’s interpretation of Directive 2009/119/EC that these bilateral agreements must be achieved and the contingency planning for supply interruptions must be in place and demonstrably reliable if any regional approach is going to be deemed acceptable to the European Commission and/or the IEA.

A key point to bear in mind is that countries hoping to put in place such agreements have to be able to demonstrate that these are robust and effective. It is not sufficient to simply have such regulations. Key issues that can arise include the following:

• Who holds title on any stocks held? • What procedures are in place to release stocks to countries other than the country in which the stocks are held? • In emergency or crisis situations, how are stocks released to each country affected? • How can political, economic or other interference be avoided to ensure that a country can be supplied from another with its emergency oil stocks?

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In case of holding stocks outside national borders, it is of extreme importance to define clearly availability of stocks at all times as well providing transparency on the quantity and location of emergency stocks. Beneficiaries should established agreements for the identification, accounting and control of the stocks to allow them to be verified at any time. They also should ensure availability of stocks at all times and release if needed.

Each beneficiary should provide information needed to identify the specific storage facility where the stocks are located as well as the quantities, the owner of the stocks and their nature. Stock release procedures in case of shortage have to be set out clearly.

16.3. Infrastructure

The main benefit of having any crossborder or regional approach to emergency stockholding is that of economy of scale although there are other advantages as well as disadvantages.

Generally the advantages of such arrangements might include:

• Economy of scale (reduced cost of building and operating storage facilities if these are concentrated or centralised in fewer locations with shared support services (control rooms, monitoring, auditing etc). • Access to sea ports for landlocked countries (for lower cost transportation of products by sea versus by rail or road). • Ability to utilise spare storage capacity in countries close to others that have inadequate levels of storage.

At the same time, the disadvantages of a regional approach include:

• Lack of clarity in ownership of stocks. • Delays in releasing stocks to markets in other countries (either through slower decision making or through physically longer. distances/extended supply chains). • Political or economic interference in the management of emergency stocks. • Risk of double counting stocks i.e. the same stock being part of the stockholding obligation in both countries. • Potential for breakdown of the regional approach if supply shortages are caused by intraregional conflict or dispute. • Plans have to be assessed/audited by outside independent bodies.

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So, overall, it can be seen that most of the advantages are due to infrastructural benefits (that reduce the cost of stockholding) while most of the disadvantages are organisational and procedural.

In this region (CPs) there are no excess capacities for oil stocks. Therefore, especially in the period of stock building emphasize has to be given to intergovernmental agreements regarding joint emergency response planning in order to minimize the adverse effects of supply disruptions in the interconnected market of the region.

It is also understood that the Serbian Government has been keen to support the use of a regional approach to energy security. 16.4. Examples of regional approaches As previously stated, there are examples of crossborder stockholdings and other forms of regional cooperation.

One of the most common forms of regional cooperation is via bilateral agreements between EU member states. Although these are not uncommon, they have to meet the requirements of the existing and new EU Directive. The principle challenge in any of these bilateral agreements is that they are assessed to be sufficiently robust and reliable that they will work at times of supply interruption.

A recent summary of the EU member states holding bilateral agreements in oil stockholdings is presented in Table 145:

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Table 145 EU Bilateral Emergency Oil Stocks Agreements

BE DK DE EL ES FR IE IT LU NL PT UK SE FI CY EE HU LV LT MT CZ SK SI

BE 1 1 1 1 1 3

DK 1 1 1 1 1 1 1

DE 1 2 DE &3 1 2 LU 1 2 PT 1 2 CZ 2 SI

EL 2 CY

ES 1 1 1 3

FR 1 2 DE &3 1 2 IE 3 2 LU 3 3

IE 1 1 2 IE 1 1 1

IT 1 1 3 1 1 1 1 2 SI

LU 1 2 LU 2 LU 1

NL 1 1 1 3 1 1 1 3 1 1 1 1 3 1

PT 2 PT 1 3 Continued over leaf

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BE DK DE EL ES FR IE IT LU NL PT UK SE FI CY EE HU LV LT MT CZ SK SI

UK 3 1 3 3 1 1 1 3

SE 1 1 1 1 1 1 1

FI 1 3 1 1 1

CY 2 CY 1 1

EE 1 1 1 1 1 1

HU 1 2 SI

LV 1 1 1 1 1 1

LT 1 1

MT 1 3

CZ 2 CZ 2 SK

SK 2 SK

SI 2 SI 2 SI 1 2 SI

Key: 1 = Reciprocal agreement pursuant to Article 7 of Council Directive 2006/67/EC; 2 = Asymmetrical agreement with indication of the beneficiary country of the stocks established on the territory of another Member State pursuant to Article 7 of the Council Directive 2006/67/EC; 3 =

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From this table, it can be seen that the number of bilateral agreements varies considerably (from zero to 17), this seemingly reflecting a combination of factors including the ability of a country to be selfsufficient, desiring to leverage the excess capabilities of other countries and vice versa to offer excess capabilities to other countries.

One reasonably well documented system of emergency stock holding is in Ireland. Ireland has 5 bilateral agreements in place. In 1995, Ireland set up a new State body, the National Oil Reserves Agency (NORA). Through NORA, Ireland meets its EU and IEA obligations through a combination of:

• Oil stocks owned and held by NORA (either in Ireland or in EU member states with whom Ireland has concluded a Bilateral Oil Stockholding Agreement); • Oil stock tickets where NORA has entered into shortterm commercial contracts (either in Ireland or in EU member states with whom Ireland has concluded a Bilateral Oil Stockholding Agreement) with an option to purchase, in emergency circumstances, during the period of the contract; • Operational stocks held in Ireland by industry/large consumers 7, (excluding stocks within the distribution networks (e.g. filling stations) which are deemed to be consumed).

In Ireland’s case, with limited/insufficient storage available within the country, it is able to meet its obligations through use of available storage in other EU member states.

The Netherlands holds the most bilateral agreements (17 in total), perhaps reflecting the scale of its downstream oil infrastructure and role as part of the largest oil trading hub in Europe.

The pattern of bilateral agreements also indicates that many such agreements, not surprisingly, are between neighbouring countries.

There have been some concerns about the validity and robustness of these agreements under the new EU Directive, in particular on how authorisation for stock releases might be managed and if there is potential for a conflict of interest over stocks held between CSEs and/or economic operators in countries which have such agreements.

7 The industry has no obligation to maintain strategic levels of oil stocks.

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In Belgium, the stockholding agency APETRA holds some stock for Belgium in the Netherlands. However, the agency is in a fiveyear transition period where it is attempting to bring all stocks within Belgium. The Belgian stockholding in the Netherlands is believed to have covered about 10% of its stockholding obligation.

One suggestion in terms of overcoming issues associated with bilateral agreements is to have a regional body (a type of committee or secretariat) that oversees the functioning of two or more CSEs that are bound by appropriate agreements. The role of the regional body would be to ensure the management and potential release of oil stocks for the countries involved in an appropriate way regardless of where the stocks were physically held. The aim of this is to overcome any potential conflict of interest, interference or inefficient operation due to behaviour or actions of any one country or its CSE.

Such an approach is not believed to have been put in place to date. While it appears designed to overcome some of the issues of bilateral agreements, the formation of such a body would need to be such that it had authority over multiple national CSEs. As such it is not clear how that would be regulated or legislated. 16.5. Economic Rationale for a Regional Approach Where countries have relatively small oil markets, as is the case with several Beneficiaries, there is a strong rational for trying to increase utilisation of existing capacity within the region if possible. If there is no spare tankage capacity within the region, there is a strong case for aggregation of building new capacity as there are economies of scale to be made in building fewer relatively large facilities as opposed to a greater number smaller facilities for the same capacity. PDC analysis indicates that the relationship between increasing the size of the facility against the cost follows a power law relationship of approximately 0.6 to 0.7 meaning that the additional cost of storage decreases as the facility gets larger.

Given there is cross border pipeline infrastructure in the region of the contracting parties, particularly in the countries of former Yugoslavia, there is the strong potential for regional cooperation and significant cost savings. Given that the region has to build extra capacity, if cost savings can be made these should be explored.

The Consultant believes the optimal scenario is likely to be building significant new capacity at a point where it can be tied into existing pipeline infrastructure allowing the aggregation of capacity and reducing the unit costs of storage capacity for all parties.

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16.6. Recommendations In order to increase security of oil supply in the region the Consultant recommends establishment of a Coordination Entity for oil and petroleum products consisting of representatives of the Beneficiaries and chaired by the Energy Community. The main tasks of the Coordination Entity would be monitoring of oil market and establishment of coordinated emergency response procedures.

The system should define obligations of each Beneficiary in implementation of Directive 2009/119/EC in a certain time frame. Furthermore, Beneficiaries should establish a system of a monthly statistical reporting of the levels of commercial and emergency stocks held. The Community should consider publishing of monthly statistical summary of the commercial and emergency stocks in the Community level.

In the case of supply disruption, the Coordination Entity should facilitate the coordination and implementation of measures needed for setting up of regular alternative oil supply. In order to enable quick, effective and transparent release of stocks Beneficiaries should have clear procedures in place to take measures determined by the Coordination Entity. At the Energy Community level, emergency preparedness is recommended to be defined in order to achieve the best possible response to oil shortage.

As far as bilateral agreements are concerned, the precise nature and extent of these needs to be agreed between various countries. In general, the Beneficiaries do not have surplus storage capacity so there is no obvious initial provider of storage (i.e. there is no country in a comparable position as the Netherlands). However, a Coordination Entity would be able to explore synergies and costsaving approaches for Beneficiaries to be able to meet their obligations. It is likely that this will support bilateral agreements between adjacent and near neighbouring countries, especially where one country’s market and/or infrastructure is considerably bigger than that of its neighbour’s. 16.7. Community Road Map The Energy Community is moving towards all Contracting Parties becoming compliant with Directive 2009/119/EC. To move forward towards regional cooperation, it is important that all the contracting parties can meet their emergency oil stocks obligations. Presented in Figure 97 is a road map of the Consultants view on when all Contracting Parties are likely to have completed have the recognised stages in meeting compliance with Directive 2009/119/EC. There has been discussion at the work shop conducted during the writing of this report regarding a cut – off date for all parties to have in place the required legislation and legal frameworks. Should this date come about, the timetables should be revised and the Energy Community Secretariat should be involved in determining the time frame for compliance

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with Directive 2009/119/EC as the situation evolves and more becomes known by the individual Beneficiaries.

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Figure 97 Energy Community Road Map

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17. General Conclusions and Recommendations

• All the Beneficiaries need, to some extent, to need enhance their crude oil and petroleum product stockholding systems in order to be in compliance with EU Directive 2009/119/EC. The Consultant’s found states of varying preparedness from almost compliance and having adequate facilities in place to meet stockholding obligations to Beneficiaries that need complete regulatory, legal framework and investment in facilities

• All Beneficiaries need to make some changes to their legal and regulatory framework to comply with the Directive. Whilst some are relatively minor, others need to draft the required laws and frameworks from a position of having little or no legislation and frameworks in place

• There are issues in most countries concerning the monitoring and transparent reporting of emergency stockholding and that regulations and systems will need to be developed in order to be compliant with the Directive. The Consultant found that in most cases, the data required to calculate Emergency Stock Holding Obligations, information on storage facilities and existing stock holding levels was not readily available within the timeframes set out in Directive 2009/119/EC. The Consultant recommends that all Beneficiaries continue to work with the Energy Community, International Energy Agency and other bodies to develop comprehensive and reliable data reporting systems

• The Consultant also recommends that the Beneficiaries seek cooperation with the European Community, International Energy Agency and other countries and agencies that have recently gone through the process of developing emergency oil stocks. The Consultant recommends that the Energy Community Secretariat will be pivotal in facilitating the exchange of ideas and experience between more parties

• Most Beneficiaries should be able to become compliant with the Directive by 2020 through the adoption of a phased programme of changes and investment. This will take differing degrees of regulatory reform and investment and there needs to be greater work done by all the Beneficiaries in studying how to best bring about compliance with the Directive.

• Given the likely large capital costs involved, the Consultant concludes there is scope for seeking development aid from bodies such as the European Bank for Development and Reconstruction, the European

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Investment Bank, the world bank and other such development financiers

• Data reporting in general needs to improve for technical compliance to be achieved under the Directive and there needs to be an increased level of accurate and timely reporting from companies to the relevant regulatory bodies

• The Beneficiaries are more inclined to setting up Central Stockholding Entities rather than obligating operating companies which, when tried, has caused reporting and compliance issues. The Consultant recommends that the Beneficiaries continue building robust institutions that have the capacity to effectively deal with the work load of ensuring compliance with the Directive.

• There are concerns about the costs of compliance with the Directive and there is a growing of awareness of the significant planning required to ensure compliance in terms of regulation, reporting and physical stockholding. There are however many ways in which commercial tankage providers and CSE’s can work together in order to reduce the overall cost of ensuring compliance and the Consultant recommends these are investigated fully.

• There are strong reasons for considering a regional approach to Emergency Oil Stockholding in terms of cost minimisation but significant further analysis and negotiation would be required to implement such a regional approach. The Consultant believes this should be investigated but concludes that greater regional cooperation will be more time consuming to bring about but has the potential to bring about substantial benefits.

• All the Beneficiaries have a realistic chance of being compliant with the Directive by 2020.

Emergency Oil Stocks in the Energy Community Level 183 26 April 2011

18. Appendix 1 - Crude Oil and Oil Product Supply and Demand (Data Tables) 18.1. Albania Table 146 Oil Production, Albania, 2007-2020 × 1000 t 2007 2008 2009 2010 2015 2020 Crude oil 563.2 577.3 576.6 626.8 2,037.0 1,650.0

Table 147 Crude Oil Import and Export, Albania, 2007-2020 × 1000 t 2007 2008 2009 2010 2015 2020 Import 82.0 Export 153.3 180.7 299.0 193.3 1,272.4 640.0

Table 148 Net Production of Petroleum Products, Albania, 2007-2020 × 1000 t 2007 2008 2009 2010 2015 2020 Naphtha 22.8 16.0 22.9 14.9 31.2 41.1 Gas/diesel oil 80.6 74.4 56.4 72.0 174.0 230.0 Residual fuel oil 125.7 75.8 81.5 76.0 182.0 240.0 Petrol coke 58.7 47.4 71.9 44.2 92.3 121.9 Bitumen 69.5 92.2 73.2 85.9 179.5 237.0 Total 357.2 305.8 305.9 293.0 659.0 870.0

Table 149 Refinery Own Use, Albania, 2007-2020 × 1000 t 2007 2008 2009 2010 2015 2020 Refinery gas 13.5 11.8 13.1 10.5 21.5 28.6 Residual fuel oil 20.0 17.7 17.0 15.8 32.3 42.8 Other 34.8 24.2 23.2 21.6 44.2 58.6

Table 150 Petroleum Product Imports, Albania, 2007-2020 × 1000 t/year 2007 2008 2009 2010 2015 2020 LPG 74.0 86.5 94.9 102.0 115.7 136.0 Motor gasoline 66.6 66.8 80.6 92.9 130.0 164.1 Kerosene and jet fuel 10.4 14.6 14.7 14.0 18.2 22.4 Gas/diesel oil 337.2 347.7 335.1 374.0 353.0 410.0 Residual fuel oil 20.0 20.8 31.1 57.6 0.0 0.0 Petrol coke 29.9 37.6 0.3 0.2 Bitumen 1.2 4.5 40.9 54.7 0.9 0.8 Lubricants 6.4 7.2 8.5 9.4 13.4 17.4 Other 7.7 0.5 0.2 1.8 5.0 8.9 Total 523.5 548.6 635.9 744.0 636.5 759.8

Emergency Oil Stocks in the Energy Community Level 184 26 April 2011

Table 151 Petroleum Product Exports, Albania, 2007-2020 × 1000 t/year 2007 2008 2009 2010 2015 2020 Naphtha 22.8 16.0 22.9 14.9 31.2 41.1 Residual fuel oil 23.6 58.7 Petrol coke 4.0 4.2 1.0 21.0 Bitumen 44.4 51.1 27.0 72.0 Total 71.2 71.3 22.9 14.9 82.8 192.8

Table 152 Domestic Consumption of Petroleum Products, Albania, 2007-2020 × 1000 t/year 2007 2008 2009 2010 2015 2020 LPG 74.0 86.5 94.9 102.0 115.7 136.0 Motor gasoline 66.6 66.8 80.6 92.9 130.0 164.1 Kerosene and jet 10.4 14.6 14.7 14.0 18.2 22.4 fuel Gas/diesel oil 417.8 422.1 391.5 446.0 527.0 640.0 Residual fuel oil 145.7 96.6 112.6 133.6 158.4 181.3 Petrol coke 54.7 43.2 101.8 81.8 91.6 101.1 Bitumen 26.3 45.6 114.2 140.6 153.4 165.8 Lubricants 6.4 7.2 8.5 9.4 13.4 17.4 Other 7.7 0.5 0.2 1.8 5.0 8.9 Total 809.5 783. 1 918.9 1,022.1 1,212.7 1,437.0

Emergency Oil Stocks in the Energy Community Level 185 26 April 2011

18.2. BiH

Table 153 Crude Oil Import, BiH, 2007-2020 × 1000 t 2007 2008 2009 2010 2015 2020 Crude oil 0.5 75.5 1,065.0 1,150.0 3,230.0 3,900.0

Table 154 Net Production of Petroleum Products, BiH, 2007-2020 × 1000 t 2007 2008 2009 2010 2015 2020 LPG 0.0 1.1 4.5 31 178 215 Motor gasoline 0.0 3.5 104.7 154 740 894 Naphtha 0.0 3.5 13.4 0 0 0 Gas/diesel oil 0.0 20.5 332.2 401 1,214 1,466 Residual fuel oil 0.0 49.7 236.8 257 355 429 Bitumen 0.0 0.0 110.1 127 311 395 Lubricants 9.6 9.2 32.7 37 89 111 Other 0.0 6.9 57.7 21 74 66 Total 9.6 94.4 892.1 1,029.0 2,962.0 3,576.1

Table 155 Refinery Own Use, BiH, 2007-2020 × 1000 t 2007 2008 2009 2010 2015 202 0 Refinery gas 0.0 0.9 18.9 28.2 81.1 97.9 LPG 0.0 0.4 15.8 0.0 0.0 0.0 Residual fuel oil 1.6 5.9 88.5 92.8 176.9 214.1 Petrol coke 0.0 0.0 0.0 0.0 0.0 0.0 Other 0.1 0.0 0.0 0.0 0.0 0.0

Table 156 Petroleum Product Imports, BiH, 2007-2020 × 1000 t/year 2007 2008 2009 2010 2015 2020 LPG 12.0 16.8 12.9 6.0 4.0 2.0 Motor gasoline 305.8 293.5 203.2 168.0 150.0 127.0 Kerosene and jet fuel 1.1 0.8 1.7 2.0 2.0 3.0 Gas/diesel oil 796.6 839.1 521.1 595.0 570.0 490.0 Residual fuel oil 95.4 92.6 15.0 28.0 18.0 12.0 Petrol coke 55.2 46.8 36.8 34.0 30.0 26.0 Bitumen 109.5 130.5 49.2 41.0 32.0 6.0 Lubricants 24.4 22.1 16.1 14.0 18.0 20.0 Other 1.7 1.6 1.2 2.0 2.0 2.0 Total 1,401.7 1,443.8 857.2 890.0 826.0 688.0

Emergency Oil Stocks in the Energy Community Level 186 26 April 2011

Table 157 Petroleum Product Exports, BiH, 2007-2020 × 1000 t/year 2007 2008 2009 2010 2015 2020 LPG 0.0 0.0 0.8 13.0 147.0 178.0 Motor gasoline 0.0 0.0 4.1 22.4 575.5 677.1 Gas/diesel oil 0.2 0.3 5.2 63.4 805.4 817.3 Residual fuel oil 0.0 0.0 129.7 168.3 277.4 357.2 Petrol coke 0.0 0.3 0.4 0.0 0.0 0.0 Bitumen 29.0 30.9 64.3 70.0 242.0 280.0 Lubricants 4.6 4.3 19.6 20.0 72.0 94.0 Other 0.2 0.6 16.7 12.0 33.0 48.0 Total 34.0 36.3 240.8 369.1 2,152.3 2,451.5

Table 158 Domestic Consumption of Petroleum Products, BiH, 2007-2020 × 1000 t/year 2007 2008 2009 2010 2015 2020 LPG 12.0 17.9 16.6 23.9 34.7 38.6 Motor gasoline 305.8 297.0 303.8 300.0 315.0 344.0 Kerosene and jet 1.1 0.8 1.7 2.0 2.0 3.0 fuel Naphtha 0.0 3.5 13.4 0.0 0.0 0.0 Gas/diesel oil 796.4 859.3 848.1 933.0 979.0 1,139.0 Residual fuel oil 95.4 142.3 122.1 117.0 96.0 84.0 Petrol coke 55.2 46.5 36.4 34.0 30.0 26.0 Bitumen 80.5 99.6 95.0 98.0 101.0 121.0 Lubricants 29.4 27.0 29.2 31.0 35.0 37.0 Other 1.5 7.9 42.2 11.0 43.0 20.0 Total 1,377.3 1,501.9 1,508.4 1,549.9 1,635.7 1,812.6

Emergency Oil Stocks in the Energy Community Level 187 26 April 2011

18.3. Croatia

Table 159 Oil and Condensate Production, Croatia, 2007-2020 × 1000 t 2007 2008 2009 2010 2015 2020 Crude oil 596.0 554.8 525.8 506.1 483.0 466.0 Other condensate 283.1 280.6 250.4 225.4 208.0 198.9 Total 879.1 835.4 776.2 731.5 691.0 664.9

Table 160 Crude Oil Import, Croatia, 2007-2020 × 1000 t 2007 2008 2009 2010 2015 2020 Crude oil 4,198.3 3,473.3 4,048.2 4,435.2 4,927.0 5,425.9

Table 161 Net Production of Petroleum Products, Croatia, 2007-2020 × 1000 t 2007 2008 2009 2010 2015 2020 LPG 361.5 316.9 354.6 375.0 418.0 452.0 Motor gasoline 1,202.4 1,000.9 1,247.7 1,250.0 1,305.0 1,411.0 Kerosene and jet 96.5 97.1 93.7 100.0 104.0 113.0 fuel Naphtha 220.0 155.6 164.3 157.9 194.7 214.8 Gas/diesel oil 1,676.5 1,396.8 1,491.8 1,650.0 2,036.0 2,202.0 Residual fuel oil 898.4 934.4 877.6 950.0 261.0 282.0 Petrol coke 45.4 31.6 29.9 32.7 574.2 621.0 Bitumen 189.5 169.1 107.1 117.3 110.2 119.2 Lubricants 64.8 36.9 19.7 21.6 22.5 24.4 Other 135.5 103.8 179.3 345.4 194.4 205.6 Total 4,890.5 4,243.1 4,565.7 4,999.9 5,220.0 5,644.9

Table 162 Refinery Own Use, Croatia, 2007-2020 × 1000 t 2007 2008 2009 2010 2015 2020 Refinery gas 217.4 154.5 206.9 209.8 153.9 166.4 LPG 10.9 0.0 0.0 Residual fuel oil 282.0 194.2 252.7 256.3 Petrol coke 67.8 57.9 69.1 70.1 239.3 258.8 Other 6.0 0.0 2.8

Emergency Oil Stocks in the Energy Community Level 188 26 April 2011

Table 163 Petroleum Product Imports, Croatia, 2007-2020 × 1000 t 2007 2008 2009 2010 2015 2020 LPG 2.0 9.4 16.5 21.9 33.3 36.5 Motor gasoline 255.0 288.2 224.7 235.8 249.4 253.0 Kerosene and jet fuel 4.0 20.5 0.8 10.9 21.0 27.5 Gas/diesel oil 720.5 1,063.4 587.4 703.0 784.0 838.0 Residual fuel oil 96.8 73.2 74.9 67.2 312.0 20.8 Petrol coke 200.4 191.6 133.2 118.0 20.0 15.0 Bitumen 96.3 150.7 118.1 111.0 145.0 153.0 Lubricants 29.8 30.9 30.9 32.0 34.0 38.0 Other 323.7 246.4 68.5 39.0 56.0 58.0 Total 1,728.5 2,074.3 1,255.0 1,338.8 1,654.7 1,439.8

Table 164 Petroleum Product Exports, Croatia, 2007-2020 × 1000 t 2007 2008 2009 2010 2015 2020 LPG 198.8 133.6 185.6 206.9 242.7 257.9 Motor gasoline 717.3 583.8 718.9 796.6 843.2 931.1 Kerosene and jet fuel 0.2 0.6 0.8 1.3 0.2 0.3 Naphtha 188.9 129.6 141.2 132.9 167.2 183.8 Gas/diesel oil 513.2 533.2 302.0 572.0 991.1 1,150.5 Residual fuel oil 215.4 176.2 336.0 435.4 4.3 102.5 Petrol coke 40.9 34.8 22.1 23.7 448.2 425.0 Bitumen 56.6 73.3 21.3 56.3 44.2 48.2 Lubricants 51.0 32.1 10.7 14.1 13.5 15.4 Other 37.9 38.5 126.6 151.8 107.8 41.6 Total 2,020.2 1,735.7 1,865.2 2,391.0 2,862.4 3,156.2

Table 165 International Bunkers, Croatia, 2007-2020 × 1000 t 2007 2008 2009 2010 2015 2020 Gas/diesel oil 4.4 0.0 1.4 0.0 0.0 0.0 Residual fuel oil 20.1 21.7 5.6 9.0 16.0 24.0 Jet fuel 42.8 49.8 42.5 49.0 56.0 69.0

Emergency Oil Stocks in the Energy Community Level 189 26 April 2011

Table 166 Stock Changes, Croatia, 2007-2020 × 1000 t 2007 2008 2009 2010 2015 2020 LPG 2.4 1.7 1.8 Motor gasoline 14.8 9.0 57.6 Kerosene and jet fuel 0.5 3.2 4.1 Naphtha 0.5 0.7 2.9 Gas/diesel oil 2.6 63.5 21.1 Residual fuel oil 46.6 194.4 3.9 Petrol coke 4.5 3.2 7.8 Bitumen 2.4 5.4 0.0 Lubricants 1.5 3.2 0.0 Other 3.9 31.1 71.9

Table 167 Domestic Consumption of Petroleum Products, Croatia, 2007-2020 × 1000 t 2007 2008 2009 2010 2015 2020 LPG 162.3 191.0 183.7 190.0 208.6 230.6 Motor gasoline 725.3 696.3 695.9 689.2 711.2 732.9 Kerosene and jet 58.0 64.0 55.3 60.6 68.8 71.2 fuel Naphtha 31.6 26.7 26.0 25.0 27.5 31.0 Gas/diesel oil 1,876.8 1,863.5 1,796.9 1,781.0 1,828.9 1,889.5 Residual fuel oil 713.1 615.3 614.8 572.8 552.7 176.3 Petrol coke 200.4 191.6 133.2 127.0 146.0 211.0 Bitumen 226.8 241.1 203.9 172.0 211.0 224.0 Lubricants 45.1 38.9 39.9 39.5 43.0 47.0 Other 417.4 280.6 193.1 232.6 142.6 222.0 Total 4,456.8 4,209.0 3,942.7 3,889.7 3,940. 3 3,835.5

Emergency Oil Stocks in the Energy Community Level 190 26 April 2011

18.4. FYR Macedonia

Table 168 Crude Oil Import, FYR Macedonia, 2007-2020 × 1000 t 2007 2008 2009 2010 2015 2020 Crude oil 1,073.7 1,069.3 1,007.1 1,104.0 1,323.0 1,408.0

Table 169 Net production of Petroleum Products, FYR Macedonia, 2007-2020 × 1000 t 2007 2008 2009 2010 2015 2020 LPG 7.6 29.1 28.1 31.3 35.2 37.4 Motor gasoline 178.7 176.0 176.5 185.2 318.0 341.0 Kerosene and jet 17.2 19.4 16.0 20.6 32.0 34.0 fuel Gas/diesel oil 423.9 436.1 391.8 440.1 669.0 715.0 Residual fuel oil 370.2 355.8 343.2 338.2 167.0 172.0 Total 997.6 1,016.4 955.6 1,015.5 1,221.2 1,299.4

Table 170 Refinery Own Use, FYR Macedonia, 2007-2020 × 1000 t 2007 2008 2009 2010 2015 2020 Residual fuel oil 84.0 83.3 80.2 88.3 101.0 108.0

Table 171 Petroleum Product Imports, FYR Macedonia, 2007-2020 × 1000 t 2007 2008 2009 2010 2015 2020 LPG 55.9 33.7 35.2 22.7 28.8 39.7 Motor gasoline 5.0 1.2 29.7 6.0 2.0 2.0 Kerosene and jet fuel 20.0 2.6 14.3 3.0 0.0 0.0 Naphtha 0.3 0.4 0.3 0.0 0.0 0.0 Gas/diesel oil 39.8 47.7 175.1 130.0 90.0 76.0 Petrol coke 95.2 141.8 58.4 66.0 70.0 85.0 Bitumen 6.8 3.6 5.3 5.0 7.4 9.0 Lubricants 9.8 9.4 9.2 9.1 10.2 11.4 Other 0.7 0.4 0.6 0.5 0.8 1.0 Total 233.5 240.8 328.0 242.3 209.2 224.1

Emergency Oil Stocks in the Energy Community Level 191 26 April 2011

Table 172 Petroleum Product Exports, FYR Macedonia, 2007-2020 × 1000 t 2007 2008 2009 2010 2015 2020 LPG 1.9 6.6 4.7 4.0 4.8 5.0 Motor gasoline 66.8 75.0 69.4 76.2 200.2 210.5 Kerosene and jet fuel 31.7 13.5 31.2 22.1 30.7 33.0 Gas/diesel oil 117.1 151.2 167.6 174.1 327.0 312.9 Residual fuel oil 53.8 110.5 85.9 154.4 5.5 39.0 Petrol coke 0.0 19.2 19.9 8.0 5.0 5.0 Bitumen 0.1 0.4 0.0 0.0 0.0 0.0 Other 3.0 0.0 0.0 0.0 0.0 0.0 Total 274.4 376.5 378.7 438.8 573.2 605.4

Table 173 Stock Changes, FYR Macedonia, 2007-2020 × 1000 t 2007 2008 2009 2010 2015 2020 LPG 1.4 1.3 0.8 Motor gasoline 2.4 18.7 13.8 Kerosene and jet fuel 0.7 2.5 2.5 Gas/diesel oil 3.1 29.4 22.9 Residual fuel oil 0.4 23.2 14.6 Bitumen 2.7 Other 3.0

Table 174 Domestic Consumption of Petroleum Products, FYR Macedonia, 2007-2020 × 1000 t 2007 2008 2009 2010 2015 2020 LPG 60.3 57.5 59.4 50.0 59.2 72.1 Motor gasoline 114.4 120.9 123.0 115.0 119.8 132.5 Kerosene and jet 6.2 5.9 1.6 1.5 1.3 1.0 fuel Naphtha 0.3 0.4 0.3 Gas/diesel oil 343.5 361.9 376.4 396.0 432.0 478.1 Residual fuel oil 316.8 222.1 242.7 183.8 161.5 133.0 Petrol coke 95.2 122.6 38.5 58.0 65.0 80.0 Bitumen 6.8 5.9 5.3 5.0 7.4 9.0 Lubricants 9.7 9.4 9.2 9.1 10.2 11.4 Other 0.7 0.4 0.6 0.5 0.8 1.0 Total 953.9 907.1 857.0 818.9 857.2 918.0

Emergency Oil Stocks in the Energy Community Level 192 26 April 2011

18.5. Moldova

Table 175 Crude Oil Production, Moldova, 2007-2020 × 1000 t 2007 2008 2010 2015 2020 Crude oil 8.0 15.0 12.0 12.0 12.0

Table 176 Net Production of Petroleum Products, Moldova, 2007-2020 × 1000 t 2007 2008 2010 2015 2020 LPG Motor gasoline Kerosene and jet fuel Naphtha Gas/diesel oil 4.0 5.0 5.0 5.0 5.0 Residual fuel oil 7.0 7.0 7.0 7.0 7.0 Petrol coke Bitumen Lubricants Other Total 11.0 12.0 12.0 12.0 12.0

Table 177 Petroleum Product Imports, Moldova, 2007-2020 × 1000 t 2007 2008 2010 2015 2020 LPG 50.0 60.0 60.5 78.5 98.3 Motor gasoline 205.0 213.0 219.1 254.7 293.9 Kerosene and jet fuel 20.0 21.0 21.0 26.2 31.4 Naphtha 0.0 0.0 0.0 Gas/diesel oil 357.0 371.0 390.0 469.6 556.4 Residual fuel oil 8.0 14.0 15.1 16.5 18.6 Petrol coke 0.0 0.0 0.0 Bitumen 26.0 23.0 30.0 45.2 58.8 Lubricants 16.0 11.0 12.0 15.0 18.0 Other 2.0 2.0 1.0 1.0 1.0 Total 684.0 715.0 748.7 906.7 1,076.4

Emergency Oil Stocks in the Energy Community Level 193 26 April 2011

Table 178 Petroleum Product Exports, Moldova, 2007-2020 × 1000 t 2007 2008 2010 2015 2020 LPG Motor gasoline Kerosene and jet fuel Naphtha Gas/diesel oil Residual fuel oil 1.0 5.0 Petrol coke Bitumen Lubricants 6.0 1.0 Other Total 7.0 6.0 0.0 0.0 0.0

Table 179 Stock Changes, Moldova, 2007-2020 × 1000 t 2007 2008 2010 2015 2020 LPG 3.0 5.0 Motor gasoline 2.0 5.0 Kerosene and jet fuel 1.0 3.0 Naphtha Gas/diesel oil 9.0 7.0 Residual fuel oil 1.0 Petrol coke Bitumen 1.0 Lubricants 1.0 Other 1.0 1.0

Table 180 Domestic Consumption of Petroleum Products, Moldova, 2007-2020 × 1000 t 2007 2008 2010 2015 2020 LPG 53.0 55.0 60.5 78.5 98.3 Motor gasoline 203.0 208.0 219.1 254.7 293.9 Kerosene and jet fuel 21.0 18.0 21.0 26.2 31.4 Naphtha 0.0 0.0 0.0 0.0 0.0 Gas/diesel oil 352.0 369.0 395.0 474.6 561.4 Residual fuel oil 14.0 17.0 22.1 23.5 25.6 Petrol coke 0.0 0.0 0.0 0.0 0.0 Bitumen 26.0 24.0 30.0 45.2 58.8 Lubricants 10.0 11.0 12.0 15.0 18.0 Other 1.0 1.0 1.0 1.0 1.0 Total 680.0 703.0 760.7 918.7 1,088.4

Emergency Oil Stocks in the Energy Community Level 194 26 April 2011

18.6. Montenegro

Table 181 Petroleum Product Imports, Montenegro, 2007-2020 × 1000 t 2007 2008 2009 2010 2015 2020 LPG 19.0 13.6 14.7 16.6 20.5 22.9 Motor gasoline 55.0 64.9 65.1 67.3 70.6 71.4 Kerosene and jet fuel 0.8 0.9 0.3 0.3 1.0 1.4 Gas/diesel oil 137.0 189.4 180.9 192.2 223.4 260.2 Residual fuel oil 128.0 130.7 51.1 74.7 86.1 94.4 Petrol coke 48.0 42.6 16.0 33.2 43.2 44.0 Bitumen 3.0 4.0 2.5 15.0 34.2 32.6 Lubricants 1.0 1.1 0.9 0.9 1.0 1.2 Total 391.8 447.2 331.4 400.3 480.0 528.2

Table 182 Domestic Consumption of Petroleum Products, Montenegro, 2007-2020 × 1000 t 2007 2008 2009 2010 2015 2020 LPG 19.0 13.6 14.7 16.6 20.5 22.9 Motor gasoline 55.0 64.9 65.1 67.3 70.6 71.4 Kerosene and jet 0.8 0.9 0.3 0.3 1.0 1.4 fuel Gas/diesel oil 137.0 189.4 180.9 192.2 223.4 260.2 Residual fuel oil 128.0 130.7 51.1 74.7 86.1 94.4 Petrol coke 48.0 42.6 16.0 33.2 43.2 44.0 Bitumen 3.0 4.0 2.5 15.0 34.2 32.6 Lubricants 1.0 1.1 0.9 0.9 1.0 1.2 Total 391.8 447.2 331.4 400.3 480.0 528.2

Emergency Oil Stocks in the Energy Community Level 195 26 April 2011

18.7. Serbia

Table 183 Oil and Condensate Production, Serbia, 2007-2020 × 1000 t 2007 2008 2009 2010 2015 2020 Crude oil 639.0 636.1 662.7 863.0 1,352.0 1,301.0 LPG 9.51 9.9 11.24 10.7 13.4 22.1 Other condensate 7.3 7.5 8.2 7.8 9.8 16.1 Total 655.8 653.5 682.2 881.5 1,375.2 1,339.2

Table 184 Crude Oil Import, Serbia, 2007-2020 × 1000 t 2007 2008 2009 2010 2015 2020 Crude oil 2,586.0 2,587.0 2,281.0 2,119.3 3,435.0 4,581.0

Table 185 Net Production of Petroleum Products, Serbia, 2007-2020 × 1000 t 2007 2008 2009 2010 2015 2020 LPG 108.2 112.7 119.0 105.0 168.4 177.6 Motor gasoline 624.1 615.4 599.3 630.0 1,106.3 1,480.0 Kerosene and jet 57.0 68.6 51.2 57.0 91.4 118.4 fuel Naphtha 252.5 254.4 144.1 146.6 240.3 206.0 Gas/diesel oil 1,065.9 1,048.7 983.3 990.0 1,827.8 2,664.0 Residual fuel oil 652.4 571.6 628.1 600.0 817.7 592.0 Bitumen 192.2 220.3 126.3 146.6 170.3 198.0 Lubricants 1.1 2.4 1.1 1.5 1.6 1.2 Other 62.5 54.3 1.7 23.3 1.5 9.2 Total 3,015.9 2,948.5 2,654.0 2,700.0 4,425.2 5,446.4

Table 186 Refinery Own Use, Serbia, 2007-2020 × 1000 t 2007 2008 2009 2010 2015 2020 Refinery gas 50.0 50.6 62.0 57.2 84.3 103.7 LPG 18.4 13.0 9.2 8.5 0.0 1.0 Residual fuel oil 204.8 175.5 171.8 158.4 203.2 250.0 Petrol coke 35.2 35.7 34.9 32.2 58.9 71.5 Other 0.6

Emergency Oil Stocks in the Energy Community Level 196 26 April 2011

Table 187 Petroleum Product Imports, Serbia, 2007-2020 × 1000 t 2007 2008 2009 2010 2015 2020 LPG 231.0 244.4 267.5 286.0 271.5 270.8 Motor gasoline 3.6 3.9 2.9 2.0 54.7 85.6 Kerosene and jet fuel 6.7 0.9 0.7 1.3 1.6 1.0 Naphtha 284.2 244.4 187.1 75.4 70.7 126.0 Gas/diesel oil 428.3 584.8 535.4 544.3 432.0 329.8 Residual fuel oil 54.2 9.1 22.5 11.0 7.7 16.0 Petrol coke 22.4 96.5 62.7 64.0 78.0 92.0 Bitumen 0.0 17.4 20.4 12.7 1.7 5.0 Lubricants 40.9 51.2 18.9 48.5 54.4 61.8 Other 0.0 6.0 1.7 59.8 11.6 60.6 Total 1,071.4 1,258.6 1,119.7 1,105.0 983.9 1,048.6

Table 188 Petroleum Product Exports, Serbia, 2007-2020 × 1000 t 2007 2008 2009 2010 2015 2020 LPG 6.3 10.2 7.5 6.0 23.0 28.0 Motor gasoline 0.0 72.1 56.8 121.0 502.0 813.0 Kerosene and jet fuel 9.8 17.9 17.4 16.7 38.1 41.0 Naphtha 0.0 0.6 45.9 12.0 31.0 0.0 Gas/diesel oil 15.8 3.7 68.0 73.0 614.0 1,115.0 Residual fuel oil 41.4 72.4 109.5 32.0 224.0 19.0 Petrol coke 0.0 0.0 0.0 0.0 0.0 0.0 Bitumen 0.0 32.7 13.6 14.3 12.0 58.0 Lubricants 21.2 3.3 3.3 2.0 3.0 5.0 Other 0.0 0.2 0.2 0.0 0.0 0.0 Total 94.6 213.1 322.1 277.0 1,447.1 2, 079.0

Table 189 Stock Changes, Serbia, 2007-2020 × 1000 t 2007 2008 2009 2010 2015 2020 LPG 10.5 Motor gasoline 10.6 17.8 21.5 Kerosene and jet fuel 1.2 4.0 5.9 Naphtha 27.4 26.2 95.8 Gas/diesel oil 17.1 15.5 7.3 Residual fuel oil 36.6 47.5 28.9 Bitumen 4.2 15.9 2.8

Emergency Oil Stocks in the Energy Community Level 197 26 April 2011

Table 190 Domestic Consumption of Petroleum Products, Serbia, 2007-2020 × 1000 t 2007 2008 2009 2010 2015 2020 LPG 342.4 356.8 379.7 395.7 430.2 442.5 Motor gasoline 617.2 565.0 523.9 511.0 659.0 752.6 Kerosene and jet 52.8 47.6 40.4 41.6 54.9 78.4 fuel Naphtha 509.2 472.0 189.4 210.0 280.0 332.0 Gas/diesel oil 1,495.4 1,614.3 1,457.9 1,461.3 1,645.8 1,878.8 Residual fuel oil 628.7 555.8 570.1 579.0 601.4 589.0 Petrol coke 22.4 96.5 62.7 64.0 78.0 92.0 Bitumen 196.3 220.9 130.2 145.0 160.0 145.0 Lubricants 20.8 50.2 16.7 48.0 53.0 58.0 Other 62.5 60.2 3.3 83.1 13.1 69.8 Total 3,947.7 4,039.4 3,374.3 3,538.7 3,975.4 4,4 38.1

Emergency Oil Stocks in the Energy Community Level 198 26 April 2011

18.8. UNMIK

Table 191 Petroleum Product Imports, UNMIK, 2007-2020 × 1000 t 2007 2008 2009 2010 2015 2020 LPG 18.0 26.0 44.4 44.7 61.6 66.0 Motor gasoline 79.0 87.2 91.8 78.9 107.5 120.0 Kerosene and jet fuel 23.0 24.9 20.1 18.0 27.5 31.5 Gas/diesel oil 222.0 202.0 241.3 244.9 294.0 363.6 Residual fuel oil 81.0 93.2 105.6 97.3 136.0 139.0 Petrol coke 33.1 43.8 42.0 60.0 Bitumen 36.0 49.0 47.3 40.4 78.0 85.0 Lubricants 16.7 6.0 5.6 5.2 8.5 11.0 Total 475.7 488.4 589. 2 573.1 755.1 876.1 Note Table 192 Domestic Consumption of Petroleum Products, UNMIK, 2007-2020 × 1000 t 2007 2008 2009 2010 2015 2020 LPG 18.0 26.0 44.4 44.7 61.6 66.0 Motor gasoline 79.0 87.2 91.8 78.9 107.5 120.0 Kerosene and jet fuel 23.0 24.9 20.1 18.0 27.5 31.5 Gas/diesel oil 222.0 202.0 241.3 244.9 294.0 363.6 Residual fuel oil 81.0 93.2 105.6 97.3 136.0 139.0 Petrol coke 33.1 43.8 42.0 60.0 Bitumen 36.0 49.0 47.3 40.4 78.0 85.0 Lubricants 16.7 6.0 5.6 5.2 8.5 11.0 Total 475.7 488.4 589.2 573.1 755.1 876.1

Emergency Oil Stocks in the Energy Community Level 199 26 April 2011

18.9. Georgia Table 193 Georgia Petroleum Product Consumption, 2007-2020 × 1000 t/year 2007 2008 2009 2010 2015 2020 Refinery gas 0.0 0.0 0.0 0.0 0.0 0.0 LPG 18.5 11.6 10.3 1.2 15.1 4.5 Motor gasoline 387.9 410.2 466.5 539.1 696.2 892.7 Kerosene and jet fuel 44.6 59.0 57.3 72.8 98.2 129.9 Naphtha 0.0 0.0 0.0 0.0 0.0 0.0 Gas/diesel oil 347.0 347.4 380.9 409.6 477.5 562.3 Residual fuel oil 0.0 0.0 0.0 0.0 0.0 0.0 Petrol coke 0.0 0.0 0.7 1.2 2.6 4.2 Bitumen 163.6 151.7 158.7 150.8 141.1 128.9 Lubricants 14.3 15.4 13.5 13.1 11.5 9.4 Other 0.0 0.0 0.0 0.0 0.0 0.0 Total 975.9 995.4 1,087.9 1,187.9 1,411.9 1,731.8

Table 194 Georgian Domestic Petroleum Product Import, 2007-2020 × 1000 t/year 2007 2008 2009 2010 2015 2020 Refinery gas 0.0 0.0 0.0 0.0 0.0 0.0 LPG 18.5 11.6 10.3 1.2 15.1 4.5 Motor gasoline 387.9 410.2 466.6 539.1 696.2 892.7 Kerosene and jet fuel 44.6 59.0 57.3 72.8 98.2 129.9 Naphtha 0.0 0.0 0.0 0.0 0.0 0.0 Gas/diesel oil 347.0 347.4 380.9 409.6 477.5 562.3 Residual fuel oil 0.0 0.0 0.0 0.0 0.0 0.0 Petrol coke 0.0 0.0 0.7 1.2 2.6 4.2 Bitumen 163.6 151.7 158.7 150.8 141.1 128.9 Lubricants 14.3 15.4 13.5 13.1 11.5 9.4 Other 0.0 0.0 0.0 0.0 0.0 0.0 Total 975.9 995.4 1088.0 1187.9 1411.9 1731.8

Emergency Oil Stocks in the Energy Community Level 200 26 April 2011

18.10. Turkey Table 195 Oil and Condensate Production, Turkey, 2007-2020 × 1000 t 2007 2008 2009 2010 2015 2020 Crude oil 2,134 2,160 2,402 LPG Other condensate Total 2,134 2,160 2,402

Table 196 Crude Oil Import, Turkey, 2007-2020 × 1000 t 2007 2008 2009 2010 2015 2020 Crude oil 23,446 21,725 14,219

Table 197 Net Production of Petroleum Products, Serbia, 2007-2020 × 1000 t 2007 2008 2009 2010 2015 2020 LPG 762 793 604 Motor gasoline 4,098 4,562 3,963 Kerosene and jet 2,407 2,569 2,029 fuel Naphtha 974 577 168 Gas/diesel oil 7,016 7,078 5,102 Residual fuel oil 6,369 5,363 3,012 Petrol coke Bitumen 2,286 2,244 2,010 Lubricants 294 275 246 Other 785 436 314 Total

Table 198 Refinery Own Use, Turkey, 2007-2020 × 1000 t 2007 2008 2009 2010 2015 2020 Refinery gas 563 493 1,189 LPG Residual fuel oil 895 708 233 Petrol coke Other

Emergency Oil Stocks in the Energy Community Level 201 26 April 2011

Table 199 Petroleum Product Imports, Turkey, 2007-2020 × 1000 t 2007 2008 2009 2010 2015 2020 LPG 2,922 2,684 3,075 Motor gasoline 578 302 205 Kerosene and jet fuel 137 5 621 Naphtha 1709 Gas/diesel oil 7,942 8,333 9,117 Residual fuel oil 483 796 631 Petrol coke Bitumen Lubricants 455 305 657 Other

Table 200 Petroleum Product Exports, Turkey, 2007-2020 × 1000 t 2007 2008 2009 2010 2015 2020 LPG 150 74 88 Motor gasoline 2,027 2,572 1,960 Kerosene and jet fuel 355 538 663 Naphtha 100 69 28 Gas/diesel oil 579 524 395 Residual fuel oil 2,555 2,531 1,171 Petrol coke Bitumen Lubricants Other

Table 201 Domestic Consumption of Petroleum Products, Turkey, 2007-2020 × 1000 t 2007 2008 2009 2010 2015 2020 LPG 3,420 3,381 3,634 Motor gasoline 2,463 2,354 2,449 Kerosene and jet 2,161 2,085 1,884 fuel Naphtha 868 575 1,899 Gas/diesel oil 13,504 14,509 13,644 Residual fuel oil 2,867 2,503 2,128 Petrol coke Bitumen 2,269 2,251 2,001 Lubricants 733 591 652 Other 1,750 591 652

Forecast data not provided forward as analysis is proprietary. Turkey’s recent consumption is included in this section.

Emergency Oil Stocks in the Energy Community Level 202 26 April 2011

The Ukraine did not submit data for the study. Therefore proprietary information and forecasts were used.

Emergency Oil Stocks in the Energy Community Level 203 26 April 2011

19. Appendix 2 - Economic Forecasting Assumptions Table 202 GDP Data Used in Economic Forecasting

Scale 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Albania GDP 1,000,000 7,187 6,575 6,037 6,072 6,236 6,440 6,690 7,011 7,382 7,807 8,279 8,779 9,309 GDP per capita 1 2,267 2,064 1,885 1,887 1,928 1,982 2,048 2,136 2,249 2,378 2,522 2,674 2,836 Bosnia and Herzegovina GDP 1,000,000 12,665 11,642 11,012 11,137 11,635 12,183 12,670 13,177 13,836 14,528 15,2 54 16,017 16,818 GDP per capita 1 3,238 2,982 2,826 2,863 2,996 3,142 3,273 3,411 3,581 3,761 3,949 4,146 4,353 Croatia GDP 1,000,000 50,524 47,748 41,492 41,407 42,227 43,273 44,356 45,470 46,834 48,239 49,686 51,177 52,712 GDP per capita 1 11,393 10 ,780 9,368 9,349 9,534 9,770 10,014 10,266 10,574 10,891 11,218 11,554 11,901 UNMIK GDP 1,000,000 5,384 5,299 5,540 5,808 6,074 6,330 6,527 6,771 7,109 7,465 7,913 8,387 8,891 GDP per capita 1 2,639 2,523 2,564 2,652 2,748 2,838 2,888 2,957 3,105 3,260 3,455 3,663 3,882 Former Yugoslav Republic GDP 1,000,000 6,223 5,858 5,806 5,919 6,154 6,363 6,580 6,812 7,084 7,368 7,662 7,969 8,288 of Macedonia GDP per capita 1 3,028 2,842 2,808 2,855 2,959 3,050 3,145 3,214 3,343 3,476 3,615 3,760 3,910 Montenegro GDP 1,000,000 3,290 2,937 2,710 2,752 2,887 3,016 3,127 3,236 3,365 3,534 3,710 3,896 4,091 GDP per capita 1 5,181 4,611 4,235 4,286 4,484 4,676 4,841 4,994 5,193 5,453 5,726 6,012 6,313 Serbia GDP 1,000,000 24,259 19,404 16,729 16,847 18,612 19,567 20,599 21,406 22,262 23,153 24,079 25,042 26,044 GDP per capita 1 3,286 2,629 2,262 2,273 2,506 2,630 2,763 2,865 2,980 3,099 3,223 3,352 3,486 Moldova GDP 1,000,000 901 788 723 742 770 812 867 925 980 1,039 1,101 1,167 1,237 GDP per capita 1 252 221 203 209 217 229 244 260 276 292 310 328 348 Georgia GDP 1,000,000 7,533 7,237 7,635 7,941 8,338 8,754 9,192 9,652 9,801 10,139 10,477 10,814 11,152 GDP per capita 1 3,047 2,865 3,230 3,592 3,995 4,443 4,941 5,496 5,637 6,013 6,389 6,764 7,140 Turkey GDP 1,000,000 68,404 65,197 70,283 72,813 75,507 78,376 81,480 84,739 86,536 89,187 91,839 94,490 97,142 GDP per capita 1 9,158 9,064 10,426 11,312 12,227 13,103 14,032 15,002 15,787 16,676 17,565 18,454 19,344 Ukraine GDP 1,000,000 91,983 78,094 81,008 84,676 88,742 92,730 96,758 100,660 99,693 101,993 104,294 106,595 108,896 GDP per capita 1 2,580 2,502 2,977 3,462 3,976 4,478 4,966 5,466 5,809 6,256 6,703 7,149 7,596 Source: International Monetary Fund, World Economic Outlook Database and Consultant's own models, All values given in constant US$

Emergency Oil Stocks in the Energy Community Level 204 26 April 2011

Table 203 Albania MAED Inputs

Demography Item Unit 2006 2010 2015 2020 Population [million] 3.154 3.195 3.290 3.370 Pop. gr. Rate [%p.a.] 0.32 0.59 0.48 Urban pop. [%] 47.559 51.200 55.000 58.200 Capita/hh [cap] 3.5714 3.400 3.200 2.980 Rural pop. [%] 52.441 48.800 45.000 41.800 Capita/hh [cap] 4.3526 4.300 4.200 4.100 Total freight - Item Unit 2006 2010 2015 2020 kilometres Freightkm [10^9 tkm] 4.686 6.261 7.333 9.256 Distance Item Unit 2006 2010 2015 2020 travelled Dist. intracity km/prsn/day 20.821 21.630 22.470 23.342 Modal split of Item Unit 2006 2010 2015 2020 intracity Car diesel [%] 15.018 16.000 17.500 19.700 passenger transportation Car gasoline [%] 15.302 16.600 18.100 19.500 Car LPG [%] 0.000 1.000 1.900 2.860 Bus large [%] 68.148 61.500 55.100 48.300 Bus small [%] 0.000 0.000 0.000 0.000 Bus CNG [%] 0.000 1.000 2.170 3.600 Tramway el. [%] 0.000 1.000 1.700 2.260 Trolleybus [%] 0.000 1.000 1.620 2.230 Motorbike [%] 1.531 1.900 1.910 1.550 Factors for Item 2006 2010 2015 2020 intercity Car ownership [person/car] 14.011 9.660 5.740 4.150 passenger transport by car Carkilometers [km/car/yr] 8530.000 8894.671 9274.933 9671.451 Mo dal split of Item Unit 2006 2010 2015 2020 public Air plane [%] 0.694 0.694 0.694 0.694 intercity Motorbike [%] 0.000 0.000 0.000 0.000 passenger transportation Bus large [%] 92.371 91.303 87.860 84.900 Bus small [%] 0.000 0.000 0.000 0.000 Bus CNG [%] 0.000 0.000 1.000 2.154 Train diesel [%] 6.936 8.003 7.000 6.000 Train electric [%] 0.000 0.000 3.446 6.252 Note: Red cells indicate uncertain estimate

Emergency Oil Stocks in the Energy Community Level 205 26 March 2011

Table 204 MAED Inputs BiH

Demography Item Unit 2008 2010 2015 2020 Population [million] 3.521 3.543 3.591 3.622 Pop. gr. Rate [%p.a.] 0.27 0.27 0.18 Urban pop. [%] 33.037 33.936 35.908 37.851 Capita/hh [cap] 3.0403 3.007 2.924 2.811 Rural pop. [%] 66.963 66.064 64.092 62.149 Capita/hh [cap] 3.2999 3.267 3.146 2.997 Total freight - Item Unit 2008 2010 2015 2020 kilometers Freightkm [10^9 tkm] 7.838 9.520 11.790 14.530 Distance Item Unit 2008 2010 2015 2020 travelled Dist. intracity km/prsn/day 27.51061 28.600 31.100 32.820 Modal split of Item Unit 2008 2010 2015 2020 intracity Car diesel [%] 28.475 27.200 29.000 30.800 passenger transportation Car gasoline [%] 27.038 26.600 25.000 23.100 Car LPG [%] 0.357 0.509 0.726 1.036 Bus large [%] 43.646 42.000 39.700 36.700 Bus small [%] 0.000 0.000 0.000 0.000 Bus CNG [%] 0.000 0.000 1.000 1.710 Tramway el. [%] 0.000 0.000 1.000 1.368 Trolleybus [%] 0.000 0.000 1.000 1.368 Motorbike [%] 0.485 3.691 2.574 3.918 Factors for Item Unit 2008 2010 2015 2020 intercity Car passenger ownership [person/car] 6.001 5.376 4.780 3.960 transport by Car car kilometers [km/car/yr] 6523.553 6800.000 7624.941 8600.000 Modal split of Item Unit 2008 2010 2015 2020 public Air plane [%] 5.025 5.496 5.496 5.496 intercity passenger Motorbike [%] 0.000 0.000 0.000 0.000 transportation Bus large [%] 84.926 84.210 82.930 82.220 Bus small [%] 0.000 0.000 0.000 0.000 Bus CNG [%] 0.000 0.000 1.000 1.710 Train diesel [%] 5.025 5.296 5.496 5.496 Train electric [%] 5.025 4.998 5.079 5.079

Emergency Oil Stocks in the Energy Community Level 206 26 March 2011

Table 205 MAED Inputs Croatia

Demography Item Unit 2005 2010 2015 2020 Population [million] 4.455 4.420 4.355 4.280 Pop. gr. Rate [%p.a.] 0.16 0.30 0.35 Capita/hh [cap] 2.9980 2.930 2.830 2.712 Total freight - Item Unit 2005 2010 2015 2020 kilometres Freightkm [10^9 tkm] 16.617 20.221 24.600 29.600 Distance Item Unit 2005 2010 2015 2020 travelled Dist. intracity km/prsn/day 19.811 21.000 21.700 22.800 Modal split of Item Unit 2005 2010 2015 2020 intracity Car diesel [%] 21.927 24.310 24.630 25.770 passenger Car gasoline [%] 34.629 29.600 28.200 25.300 transportation Car LPG [%] 1.767 4.500 3.520 4.040 Car electric [%] 0.000 0.000 0.000 0.680 Car CNG [%] 0.000 0.000 3.260 5.000 Bus diesel [%] 27.811 26.700 17.420 14.000 Bus CNG [%] 0.000 0.000 9.000 12.000 Tramway el. [%] 8.618 8.618 8.618 8.618 Motorbike [%] 5.247 6.272 5.352 4.592 Factors for Item Unit 2005 2010 2015 2020 intercity Car passenger ownership [person/car] 3.174 2.871 2.655 2.456 transport by car Car kilometers [km/car/yr] 8448.017 9020.616 9360.000 9540.000 Modal split of Item Unit 2005 2010 2015 2020 public intercity Air plane [%] 25.863 25.330 22.878 22.878 passenger Motorbike [%] 0.000 0.000 0.000 0.000 transportation Bus large [%] 59.425 64.786 63.700 60.500 Bus medium [%] 0.000 0.000 0.000 0.000 Bus small [%] 0.000 0.000 0.000 0.000 Bus CNG [%] 0.000 0.000 2.500 4.000 Bus H [%] 0.000 0.000 0.000 1.000 Train diesel [%] 7.356 6.000 6.000 6.000 Train electric [%] 7.356 3.884 4.922 5.622 Note: Red cells indicate uncertain estimate

Emergency Oil Stocks in the Energy Community Level 207 26 March 2011

Table 206 MAED Inputs FYR Macedonia

Demography Item Unit 2005 2010 2015 2020 Population [million] 2.034 2.041 2.037 2.025 Pop. gr. Rate [%p.a.] 0.07 0.04 0.12 Capita/hh [cap] 3.4870 3.330 3.178 3.031 Total freight - Item Unit 2005 2010 2015 2020 kilometres Freightkm [10^9 tkm] 2.580 2.800 3.800 5.330 Distance Item Unit 2005 2010 2015 2020 travelled Dist. intracity km/prsn/day 14.713 15.646 16.638 17.693 Modal split of Item Unit 2005 2010 2015 2020 intracity Car diesel [%] 4.662 6.800 9.800 13.900 passenger Car gasoline [%] 21.599 21.700 21.440 21.100 transportation Car LPG [%] 6.070 6.510 7.420 8.260 Bus large [%] 67.189 61.500 55.100 47.500 Bus small [%] 0.000 0.000 0.000 0.000 Bus CNG [%] 0.000 1.000 2.170 3.600 Tramway el. [%] 0.000 1.000 1.700 2.260 Trolleybus [%] 0.000 1.000 1.620 2.230 Motorbike [%] 0.480 0.490 0.750 1.150 Factors for Item Unit 2005 2010 2015 2020 intercity Car passenger ownership [person/car] 6.561 4.850 3.670 3.040 transport by Car car kilometres [km/car/yr] 5263.622 5986.010 6807.540 7741.818 Modal split of Item Unit 2005 2010 2015 2020 public intercity Air plane [%] 0.115 0.115 0.115 0.115 passenger Motorbike [%] 0.000 0.000 0.000 0.000 transportation Bus large [%] 96.496 94.300 92.600 90.700 Bus small [%] 0.000 0.000 0.000 0.000 Bus CNG [%] 0.000 0.000 1.000 2.154 Train diesel [%] 1.685 2.021 2.424 2.907 Train electric [%] 1.704 3.564 3.861 4.124 Note: Red cells indicate uncertain estimate

Emergency Oil Stocks in the Energy Community Level 208 26 March 2011

Table 207 MAED Inputs Moldova

Demography Item Unit 2007 2010 2015 2020 Population [million] 3.581 3.530 3.450 3.390 Pop. gr. Rate [%p.a.] 0.48 0.46 0.35 Capita/hh [cap] 2.6006 2.570 2.520 2.500 Total freight - Item Unit 2007 2010 2015 2020 kilometres Freightkm [10^9 tkm] 6.443 8.000 10.600 12.900 Distance Item Unit 2007 2010 2015 2020 travelled Dist. intracity km/prsn/day 6.084619 7.106 9.204 11.922 Modal split o f Item Unit 2007 2010 2015 2020 intracity Car diesel [%] 7.383 7.800 10.700 12.920 passenger Car gasoline [%] 46.160 43.400 39.800 35.800 transportation Car LPG [%] 5.206 6.000 8.000 11.300 Bud d. [%] 22.068 23.000 21.000 17.500 Bus g. [%] 3.378 3.555 3.871 4.216 Bus CNG [%] 0.480 0.761 1.000 2.154 Tramway el. [%] 0.000 0.000 0.000 0.000 Trolleybus [%] 13.752 13.752 13.752 13.752 Motorbike [%] 1.572 1.731 1.876 2.358 Factors for Item Unit 2007 2010 2015 2020 intercity Car passenger ownership [person/car] 11.739 10.360 8.450 7.030 transport by Car car kilometres [km/car/yr] 4398.218 4472.405 4598.840 4728.850 Modal split of Item Unit 2007 2010 2015 2020 public Air plane [%] 0.000 0.000 0.000 0.000 intercity Motorbike [%] 0.000 0.000 0.000 0.000 passenger transportation Bud diesel [%] 55.747 55.075 53.973 52.894 Bus gasoline [%] 10.783 10.783 10.783 10.783 Bus CNG [%] 0.719 0.992 1.000 1.710 Train diesel [%] 16.376 15.806 14.901 14.048 Train electric [%] 16.376 17.344 19.343 20.566 Note: Red cells indicate uncertain estimate

Emergency Oil Stocks in the Energy Community Level 209 26 March 2011

Table 208 MAED Inputs Montenegro

Demography Item Unit 2003 2010 2015 2020 Population [million] 0.634 0.640 0.648 0.653 Pop. gr. Rate [%p.a.] 0.14 0.24 0.18 Capita/hh [cap] 3.6442 3.430 3.260 3.080 Total freight - Item Unit 2003 2010 2015 2020 kilometres Freightkm [10^9 tkm] 2.274 4.080 5.070 6.070 Distance Item Unit 2003 2010 2015 2020 travelled Dist. intracity km/prsn/day 10.74115 12.163 13.773 15.597 Modal sp lit of Item Unit 2003 2010 2015 2020 intracity Car diesel [%] 10.193 12.400 14.600 16.700 passenger Car gasoline [%] 79.669 64.000 55.600 45.000 transportation Car LPG [%] 0.000 12.000 12.400 12.750 Bus large [%] 7.543 10.200 15.000 22.000 Bus small [%] 1.697 0.000 0.000 0.000 Bus CNG [%] 0.000 0.000 1.000 2.170 Tramway el. [%] 0.000 0.000 0.000 0.000 Trolleybus [%] 0.000 0.000 0.000 0.000 Motorbike [%] 0.898 1.400 1.400 1.380 Factors for Item Unit 2003 2010 2015 2020 intercity Car ownership [person/car] 2003.000 2003.000 2003.000 2003.000 passenger transport by car Carkilometres [km/car/yr] 2003.000 2003.000 2003.000 2003.000 Modal split of Item Unit 2003 2010 2015 2020 public Air plane [%] 38.860 34.026 29.793 26.087 intercity Motorbike [%] 0.000 0.000 0.000 0.000 passenger transportation Bus large [%] 18.188 30.700 37.700 43.400 Bus small [%] 4.091 Bus CNG [%] 0.000 0.000 1.000 2.154 Train diesel [%] 14.573 12.203 10.218 8.557 Train electric [%] 24.288 23.071 21.288 19.802 Note: Red cells indicate uncertain estimate

Emergency Oil Stocks in the Energy Community Level 210 26 March 2011

Table 209 MAED Inputs Serbia

Demography Item Unit 2007 2010 2015 2020 Population [million] 7.382 7.320 7.208 7.131 Pop. gr. Rate [%p.a.] 0.28 0.31 0.21 Capita/hh [cap] 2.9509 2.940 2.870 2.770 Total freight - Item Unit 2007 2010 2015 2020 kilometres Freightkm [10^9 tkm] 18.652 22.000 27.000 32.500 Distance Item Unit 2007 2010 2015 2020 travelled Dist. intracity km/prsn/day 10.64661 11.158 12.067 13.049 Mo dal split of Item Unit 2007 2010 2015 2020 intracity Car diesel [%] 29.609 29.000 27.700 26.600 passenger Car gasoline [%] 33.310 33.030 32.580 31.640 transportation Car LPG [%] 11.103 10.980 10.080 9.110 Bus large [%] 24.194 25.000 26.100 27.800 Bus small [%] 0.000 0.000 0.000 0.000 Bus CNG [%] 0.000 0.000 1.000 2.154 Tramway el. [%] 0.000 0.000 0.000 0.000 Trolleybus [%] 0.000 0.000 0.000 0.000 Motorbike [%] 1.784 1.990 2.540 2.696 Factors for Item Unit 2007 2010 2015 2020 intercity Car passenger ownership [person/car] 5.091 4.700 3.900 3.360 transport by Car car kilometres [km/car/yr] 6050.000 6416.770 7078.125 7807.644 Modal split of Item Unit 2007 2010 2015 2020 public Air plane [%] 0.000 0.000 0.000 0.000 intercity Motorbike [%] 0.000 0.000 0.000 0.000 passenger transportation Bus large [%] 79.014 78.062 76.500 74.969 Bus small [%] 0.000 0.000 0.000 0.000 Bus CNG [%] 0.000 0.000 1.000 1.710 Train diesel [%] 10.493 10.128 9.548 9.001 Train electric [%] 10.493 11.810 12.952 14.319 Note: Red cells indicate uncertain estimate

Emergency Oil Stocks in the Energy Community Level 211 26 March 2011

Table 210 MAED Inputs UNMIK

Demography Item Unit 2006 2010 2015 2020 Population [million] 2.033 2.161 2.290 2.420 Pop. gr. Rate [%p.a.] 0.27 1.54 1.17 1.11 Capita/hh [cap] 6.4500 5.550 5.000 4.510 Total freight - Item Unit 2006 2010 2015 2020 kilometres Freightkm [10^9 tkm] 3.000 4.330 5.800 7.670 Factors for Item Unit 2006 2010 2015 2020 intercity Car passenger ownership [person/car] 9.100 7.730 6.190 5.080 transport by Car car kilometres [km/car/yr] 10632.705 10893.094 11159.860 11433.159 Modal split of Item Unit 2006 2010 2015 2020 public Air plane [%] 5.078 5.078 5.078 5.078 intercity Motorbike [%] 0.159 0.159 0.159 0.159 passenger transportation Bus large [%] 91.000 87.300 83.100 79.300 Bus small [%] 0.000 0.000 0.000 0.000 Bus CNG [%] 0.000 1.000 1.565 2.449 Train diesel [%] 3.763 4.800 6.000 7.000 Train electric [%] 0.000 1.663 4.097 6.013 Note: Red cells indicate uncertain estimate

Emergency Oil Stocks in the Energy Community Level 212 26 March 2011