WPC -The Slovenian National Committee Workshop in Portorož 10th - 11th April, 2003 Hotel Emona, Portorož Oil market in and

Dimitri Vukcevic General Manager NIS - Petroleum Industry of Serbia

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Objective 1

Integration of the national market with the EU market

– harmonization of laws and regulations with the EU legislation

– modernization of petroleum processing to meet EU standards

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1 Objective imposed by geographic position

The Balkans European Crossroads

l Pan-European Corridor 10 • Roads E-70, E-75 • Railway routes

l Pan-European Corridor 7 • river

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National integration

One country – three crude oil and oil product markets

• Serbia • Kosovo (under UN protectorate) • Montenegro

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2 Montenegro Market

1. Out of 87 petrol stations in Montenegro 37, or 42%, belong to Hellenic-petroleum (Jugopetrol Kotor)

2. Oil product sales in Montenegro amount to 331,881 t

3. Liberalized oil product import

4. Oil products prices adjusted every 14 days

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Serbian Market

• Only NIS integrates within itself all respective aspects of the petroleum industry

• Other market participants engage solely in oil product marketing and dispose only of petrol station outlets, with the exception of Beopetrol that also has storage facilitiese

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3 Serbian Market, wholesale and retail

In the overall oil product sales in Other Serbia of 3,118,251 t/y NIS NIS share is 78 %, or 2,428,382 t/y In the overall motor fuel sales (gasoline and diesel) of 1,796,639 t/y NIS share is 1,482,356 t ili 82.5% Other NIS

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Serbian Market - retail

NIS In the overall motor fuel sales at the Other pump stations NIS share is 53% or 948,146 t

Out of 1236 petrol stations in Serbia NIS Other NIS owns 522, or 42%

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4 Serbian Market II

• Oil product prices are determined by the Government

• Current regulations allow only for crude oil import, while oil product import requires special permit

• Development of the overall oil market in Serbia is largely dependant upon development of NIS-Petroleum Industry of Serbia

9 • Therefore ...

Gas Trade & Distribution

E&P NIS – Company profile & investment opportunities

Processing Retail & Marketing10

5 NIS in 2002

• Sales - $ 3 bln • Natural gas -2 bln m3 • Crude Oil - 3.5 mln t

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Organisational Chart

Exploration and Production Trade and Distribution of of Oil and Gas Natural Gas

•NIS-Naftagas •NIS-Gas Novi Sad •NIS-Energogas Beograd

Processing Retail & Marketing •NIS-Oil Refinery Pancevo •NIS-Oil Refinery Novi Sad •NIS-Jugopetrol Beograd •NIS-Lube Refinery •NIS-Naftagas promet Novi Sad •NIS-Lube Refinery Kruševac Engineering • NIS-Inžinjering Novi Sad 12

6 Exploration and Production

l NIS crude oil production meets 23% of the Serbian market needs (813,000 / 3,476,000 t)

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Major Oil Projects Revitalisation

•Equipment for oil and gas exploration and production

Investment - USD 42 mln

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7 Major Oil Projects Exploration and production of oil and gas abroad

• Plan: Concessions for new sites abroad

• Goal: Additional oil production of 2 million tons per year

Investment – USD 100-200 mln 15

Processing

l Crude oil refineries capacity is 6.5 mln tons annually l Lube refineries capacity is 200,000 tons of finished products annually l The output exceeds local demand

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8 Major Rafinery Projects CONSULTANTS

Shell Global Solutions ®

Hollden Consultants R I C O B G

§ABB Lumus §AMEC §JGC

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Major Rafinery Projects Modernisation and integration of oil refineries

Refinery Integration Plan

• Oil Refineries of Pancevo & Novi Sad

Goals by 2007-2008 • European Standard 2005+ • Major regional supplier

Total Investment ...... USD 300 mln

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9 Major Rafinery Projects Product Pipeline Pancevo – Novi Sad

• Connecting two refineries - 90 km length / 10 ² diameter product pipeline, along with the supporting facilities and installations

Investment – USD 18 mln

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Major Rafinery Projects Product Pipeline Pancevo - Niš

• Length 250 km

• Niš – regional hub

Investment – USD 80 mln

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10 Transport and Distribution of Natural Gas

l Capacities are over 6 billion m³ of gas annually

l Natural gas is supplied to app. 1000 industrial consumers, and 150,000 households

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Major Gas Projects Underground Gas Storage

• Continuous and even gas supply

• Several locations/options

• Capacity 500-800 mil m3 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Demand To be stored Investment – USD 40-220 mln 22

11 Major Gas Projects Expanding Gas Transmission Network

§Horgoš

• Plan – expand gas

distribution network in Novi Sad Serbia Beograd

• Goal - another 400,000 consumers by 2010 ! Investment Niš USD 140-280 mln 23

Major Gas Projects Revitalisation of existing gas pipeline system

• Reconstruction of damaged and dilapidated parts

• Modernization of measuring & control facilities

Investment - USD 30 mln

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12 Major Gas Projects Expansion of main and municipal gas pipeline system

• & Western Serbia Investment - USD 114 mln

• Projects for some towns in Serbia are ready Investment - USD 130 mln

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Retail & Marketing

l 2002 oil product sales - 2.3 mln t

l Number of petrol stations: 522 public 1600 internal (companies)

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13 Distribution Projects Reconstruction of petrol stations

• EU standards and requirements

• Business automation

Investment – USD 54 mln 27

Distribution Projects New petrol stations

Along the transit roads

Investment – USD 70 mln 28

14 Distribution Projects Reconstruction of tank farms

• Crude oil and oil product tank farms

• Novi Sad, , Smederevo, Prahovo, Niš, Bor, Požega

Investment – USD 73 mln

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Total Investment by 2007. 2003. E&P Projects ˜ USD 140 mln 48 mln

Gas Projects ˜ USD 775 mln 39 mln Rafinery Projects ˜ USD 385 mln 64 mln Retail Projects ˜ USD 195 mln 28 mln Total Investment - ˜ USD 1.5 bln 179 mln

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15 Thank you for your patience

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