JANAF Oil Pipeline & Storage Company

JANAF Oil Pipeline & Storage Company JANAF IN EUROPEAN OIL PIPELINE NETWORK

JANAF pipeline has significant role in oil supply to refineries of SE & Central Europe

1979-2014 - 201 mil. tons , oil transport

JANAF JANAF – ADRIA PIPELINES EU PROJECT OF COMMON INTEREST

 JANAF is recognized as EU strategic pipeline through project of common interest entitled JANAF-Adria pipelines: reconstruction, upgrade, maintenance and capacity increase of the existing JANAF and Adria oil pipelines linking Croatian Omišalj seaport to the Southern Druzhba

 JANAF – Adria is one of six oil pipelines PCI and one of 248 energy PCI adopted by EC in 2013

 Promoters of the PCI are JANAF (Croatia), MOL (HU) and Transpetrol (SK) JANAF OIL PIPELINE ALLOWS FREE FLOW OF CRUDE OIL ACROSS BORDERS AND SECURE SUPPLY IN EU AND SE EUROPEAN COUNTRIES ENERGY UNION PRINCIPLE

Refinery capacities (MT): Total 37,7 MT Rijeka (Croatia) 4,5 Sisak (Croatia) 2,2 Pancevo (Serbia) 4,8 Novi Sad (Serbia) 2,5 Brod (Bosnia and Herz.) 1,3 Szazhalombatta (Hungary) 8,1

Slovnaft (Slovakia) 6,1 Kralupy & Lilvinov (Czech R.) 8,2

JANAF STORES COMPULSORY CRUDE OIL & PETROLEUM PRODUCTS STOCKS

Omišalj Terminal 240.000 m3 (crude oil)

Sisak Terminal 240.000 m3 (crude oil)

Žitnjak, Zagreb Terminal 100.000 m3 (petrolum products)

Small shareholders DUUDI / DAB JANAF OIL PIPELINE & 5% 4% HEP 5% DUUDI / RH DUUDI / STORAGE SYSTEMS 11% HZMO 37% COMPANY PROFILE INA 12% 6 CERP 26%  JANAF Plc. performs the activities of crude oil transport, as well as storage and reloading of crude oil and petroleum products  Designed capacity - 34 million tons of crude oil transported annually (MTA), while the installed capacity amounts to 20 MTA  Length of pipeline - 622 km  Omišalj-Urinj subsea oil pipeline linking Omišalj Terminal and INA- Oil Refinery Rijeka  Reversal flow on the Sisak-Coatian/Hungarian border-Sisak and Omišalj-Sisak sections (permitting procedure under way)  Terminals:  Crude oil: Omišalj, Sisak, Virje, Slavonski Brod Capacities:1,540 mil. m3, of which 640 mil. m3 was put in operation in 2013&2014  Petroleum products: Omišalj, Žitnjak-Zagreb Capacities: 200.000 m3, of which 100 mil. m3 was put in operation in 2014

OMIŠALJ TERMINAL

 Omišalj Terminal is located on the island of Krk (North Adriatic Sea)  Sea depth on the berth - 30 meters  Possibility of accommodating the largest tankers (350.000 DWT) all year round  Crude oil reloading: 2 berths of 20.000 m3/hour each with possibility of increasing for two more berths  VLCCs and ULCCs discharge: 20-36 hours  Port installed capacities: 60 mil. tons of crude oil annually

 Storage tank farm of 1.000.000 m3 for crude oil (of which 240.000 m3 for compulsory stocks) and 60.000 m3 for petroleum products

 At the entrance to the Omišalj Bay, the air bubble barrier is installed (to prevent crude oil spreading into the open sea in case of oil spill)

7 JANAF OIL PIPELINE & TERMINALS

JANAF oil pipeline route Mainland terminals

SISAK TERMINAL

 Junction onshore terminal from where the pipeline divides in two branches:  Northward to refineries in Hungary, Slovakia and Czech R.  Eastward to refineries in Bosnia & Herzegovina and Serbia

 Crude oil tank storage capacities amount to 500.000 m3  of which 240.000 m3 is intended for storing the national compulsory stocks VIRJE TERMINAL

 Crude oil tank storage capacity – 40.000 m3 SLAVONSKI BROD TERMINAL

 Pipeline forks into two branches toward:  Serbian refineries  Brod Oil Refinery in B&H

ŽITNJAK TERMINAL, ZAGREB

 Terminal modernization and construction of new storage tanks  2010-2014  Tank storage capacities for petroleum products storage amount to 140.000 m3  of which 100.000 m3 is intended for storing the national compulsory stocks

WHAT DOES JANAF OFFER TO OIL COMPANIES?

 Available pipeline and storage capacities for oil & petroleum products  Two oil supply directions and diversification of oil supply sources  Access to oil market/refineries in 6 countries (9 refineries)  Strategic partnership for new storage & pipeline projects

OIL MARKET OF SOUTH-EASTERN AND CENTRAL EUROPEAN COUNTRIES 11 Gravitation oil market 15-28 MTA (2012/13)

Oil consumption, 2012/13, mil.tons Oil consumption, 2025, mil. tons

9,26

6,51

4,00 3,45 3,25

2,10

Croatia Bosnia & Serbia Hungary Slovakia Czech Herzegovina Republic

Data Sources: EU, EZ & EIHP OIL IMPORT IN SE & CENTRAL EUROPEAN COUNTRIES

12 Oil import (2025) 14-27 MTA

Oil import, 2025, mil.tons Oil import, 2012/13, mil.tons

7,82 Czech Republic 7,85

5,13 Slovakia 5,41

6,10 Hungary 5,95

3,80 Serbia 1,59

1,10 Bosnia & Herzegovina 1,02

3,37 Croatia 2,46

Data Sources: EU, EZ & EIHP CHALLENGES

 SE & Central European countries:

 Slow economy growth and recessions  Oil consumption decrease  Refinery modernization slower than expected, threats of Many refineries shut down challenges  Crude oil & petroleum products price volatilities  Energy Union & EU energy policy:  Security of Supply  Diversification of oil supply routes  Six oil pipelines projects are EU PCI

PETROLEUM PRODUCTS CONSUMPTION

14 Countries: Existing & Potential - MIL. TONS JANAF Users 12 Existing users

10 Croatia

8 Bosnia & Herzegovina Petroleum Serbia 6 EU Countries products Hungary consumption 4 decrease Potential users 2 Slovakia

0 Czech Republic 2005 2010 2012/13 REFINERIES

15 EU refinery closures to date

SE European refinery modernization slower than expected,

threats of SEE Refinery Health Check Results 5 of the 6 SEE refineries are under refineries shut threat of change in operating model down 3,5 or even closure 3,0 2,6 2,4 2,3 2,3 2,2 1,7

World class EE best practice Source: AT Kearney UNCERTAINTIES / RISKS

16 Political risks

120,0 Crude Oil (Fortes/Brent; $/bbl) 100,0 80,0 60,0 40,0 20,0 0,0

-20,0

1973 1985 2002 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

20150312 20140917

(Forecast) 2016

EU - OIL & ENERGY SUPPLY SECURITY

Oil is to be dominant energy source Oil dependency (%) in EU for many years

40,0% 100,0 30,0% 80,0 20,0% 10,0% 60,0 0,0% -10,0% 40,0 20,0

0,0 2000 share of total 2015 share of total 2000 2010 2025 2025 share of total

EUROPEAN COMMISSION: European energy security strategy, 2014 The Commission proposed a governance scheme based on national plans for competitive, secure and sustainable energy which aims to enhance regional coordination and coherence between EU and national energy policies. It also proposed 3 energy security indicators: diversification of energy imports and share of indigenous energy sources used in energy consumption; deployment of smart grids and interconnections between Member States; and technological innovation. JANAF ANSWERS TO CHALLENGES

Revenues structure of core businesses, 2014 (%)

Petroleum products storage 11% Diversification strategy

Improvement of capacity

utilization Crude oil storage 21% Oil transportation 68% JANAF ANSWERS TO CHALLENGES

Investment in  System modernization (SCADA, GIS, Electricity system, ….) projects of environmental  Integrity pipeline control and repairs protection as well as in  Technical protection, etc. projects of human recourses and Presently, equipment safety and  Construction of subsea oil pipeline linking the island of Krk and the protection mainland, which should replace the existing crude oil transport The aims: through the Krk bridge (2015-2016)

- - to increase security of transport and supply - - to prolong pipeline life time

NEW STRATEGIC DEVELOPMENT PROJECTS

 The purpose: to improve Terminal operations and capacity utilization & interoperability  Further increase of storage activities and oil transport is expected Omišalj  Potential new investment: Terminal  Oil storage tanks capacities of 400.000 m3 (5 X 80.000 m3) at Omišalj Terminal and 160.000 m3 (2 X 80.000 m3) at Sisak Terminal (location permit Reconstruction issued) & Upgrading  Petroleum products storage tanks capacities of 100.000 m3 at Omišalj Infrastructure Terminal and 60.000 m3 at Žitnjak Terminal (location permit issued) and Crude  Strategic partnership between JANAF and oil companies Oil/Petroleum Products Tankfarms Projects

CONCLUSION

JANAF has capacities, strength and  JANAF offers to oil companies: possibilities for  Available pipeline and storage capacities for oil & petroleum products growth  Access to oil market/ refineries in 6 countries (9 refineries) JANAF has  Two oil supply directions and diversification of oil supply sources  from Mediterranean oil market as well as Druzhba pipeline to refineries in Croatia, B&H, significant role Serbia, Hungary, Slovakia and Czech R. in oil supply  JANAF has long-term and extensive experience in oil business security of  JANAF must go on with development of new projects Central & SE European  Company is open for cooperation on new commercial businesses and countries strategic partnership for development of new storage & pipeline projects

Miramarska cesta 24, 10000 Zagreb, Republic of Croatia phone: +385 1 3039 999 fax: +385 1 3095 482

E - mail: [email protected] Web: www.janaf.hr