2 nd JANAFs Conference Challenges of crude oil

2 nd JANAF’s Conference Challenges of crude oil diversification, capacities and services of JANAF Damir Vrbic, JANAF, Commercial Division ZAGREB, 24 November 2016

JANAF - in general JANAF – international oil pipeline for supply of refineries in South Eastern and Central Europe JANAF system consists of: • 622 km long pipeline • Omišalj Terminal • Sisak Terminal • Virje Terminal • Slavonski Brod Terminal • JANAF-Žitnjak, Zagreb – Petroleum Products Terminal Activities: - Pipeline transport of crude oil: 37% for local users and 63% foreign users - Storage of crude oil and petroleum products (39, 3% of total revenues in 2015) - 212 million tons transported in total, without a single accident - 2. 753 tankers in total, without a single accident - 9 September 1974 – Construction contract for use of JUNA - First tanker – December 1979 - Peak in 1991: expected transport of 12 million tons; 16 September interruption of transport; realized transport up to then 8, 7 million tons - Construction of new storage tank farms at Sisak, Omišalj, Žitnjak - 2013: reinclusion of MOL in South supply route

JANAF in figures

JANAF capacities INA-RIJEKA REFINERY CAPACITIES, (MTA) 7, 00 INA-SISAK REFINERY 8, 00 OPTIMA BROD, NIS, SERBIA 14, 00 TRANSIT, HUNGARY, SLOVAKIA DESIGNED CAPACITY, OMIŠALJ-SISAK PIPELINE JANAF INSTALLED CAPACITY Crude oil transport in 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 User / year in tons 7, 2 mil. tons 6, 3 mil. tons 6, 9 mil. tons 6, 4 mil. tons 5, 3 mil. tons 5, 6 mil. tons 5, 4 mil. tons 5, 0 mil. tons 6, 2 mil. tons again 7 mil. tons ? 1990 1991 INA – Oil Refinery Sisak 1. 337. 426 500. 761 Nafta Lendava - Slovenia 507. 517 511. 204 Oil Refinery Brod - BIH 2. 016. 440 996. 823 34, 00 NIS - Srbia 4. 451. 319 2. 846. 579 Hungary 1. 197. 091 1. 899. 943 20, 00 + Slovakia 147. 879 1. 917. 732 9. 657. 672 8. 673. 042 14, 00 TOTAL 4

CAPACITIES OF JANAF PIPLINE SECTIONS Omišalj-Sisak: 34 mil. t Sisak-East: 14 mil. t Sisak-North: 14 mil. t

European oil pipeline system and supply routes around JANAF ADRIA JANAF

Competitiveness of oil pipelines q A possibility of supply from several directions, together with an option of transport via the tanker port, represents one of the greatest benefits for the security of supply q A choice of supply direction – economic, geopolitical and other factors q The competitiveness itself of a certain route will depend on the crude oil purchase costs, transportation distance and transport mode (by tankers, oil pipeline, products pipeline) having their specific features Tariffs Distance Crude oil purchase costs

Crude oil price in $/bbl for the last 3 months - crude oil price – the most important factor in competitiveness, price differences depend upon quality, purchase place, CIF , FOB, contracts - larger quantities of Kazakh, Iraqi and Iranian crudes on the market - significant difference is observed as to the price of crude oil transportation – advantage given to the maritime transport - tanker port provides greater flexibility as regards pipeline access and crude oil purchase ( $$$ ) - increse in crude oil transport by JANAF from the Omišalj direction is to be realistically expected; arising needs

Competitive routes

JANAF, 40 years later JANAF increasing role in European security of crude oil supply The diversification of the crude oil sources and a possibility of partial replacement of oil for optimizing the crude oil pool indicate a high development of oil infrastructure present in Central and Eastern Europe later

New services / new possibilities Activity of transport Ø Crudes refined in Europe (source: dr. sc. E. Cerić) Ø Crude oil characteristics, adjustment to new era

New services Why blending? Ø Requirements of users Ø Economic variable (mix/blend of cheaper and more expensive crude gives better financial result) Ø Possibility of changing crude specifications Quality Density at 15°C Sulphur Pour point Viscosity at 20°C API KBT/EB 873, 3 2, 798 -48, 0 16, 291 30, 44 Siberian light 848, 6 0, 573 -11, 0 8, 706 35, 16 Blend 50: 50 862, 8 1, 770 -33, 0 11, 49 32, 42

Direct economic benefit from crude oil blend Blend Kirkuk – Azeri compared to REB in $/bbl

Direct economic benefit from crude oil blend Blend Azeri – Kirkuk compared to REB in $/bbl

View into the future Ø Crude oil mixing successfully performed Quality Density at 15⁰C Sulphur Pour point Viscosity at 20⁰C API' KBT/EB 873, 3 2, 798 -48, 0 16, 291 30, 44 Siberian light 848, 6 0, 573 -11, 0 8, 706 35, 16 Blend 50: 50 862, 8 1, 770 -33, 0 11, 49 32, 42 Ø Transport increase - increasing role in European security of crude oil supply Ø Construction of new storage tanks Ø Reconstruction & Upgrade of Storage Facilities and Infrastructure at Omišalj Terminal

Terminal with complete service!

Thank you!