2 nd JANAF’s Conference

1. 2nd JANAF’s Conference Challengesofcrudeoildiversification, capacitiesandservicesof JANAF Damir Vrbic, JANAF, CommercialDivision ZAGREB, 24 November 2016

2. JANAF - in general • JANAF – international oil pipeline for supply of refineries in South Eastern and Central Europe • JANAF system consists of: • 622 km longpipeline • • Omišalj Terminal • • Sisak Terminal • • Virje Terminal • • Slavonski BrodTerminal • • JANAF-Žitnjak, Zagreb – Petroleum Products Terminal • Activities: • - Pipeline transport of crudeoil: 37% for localusersand 63% for foreignusers • Storage of crudeoilandpetroleumproducts(39,3% of total revenuesin 2015) • 212 milliontonstransportedin total, without a singleaccident • 2.753 tankersin total, without a singleaccident • - 9 September 1974 – Construction contract for use • of JUNA • First tanker – December 1979 • Peak in 1991: expected transport of 12 million tons; 16 Septemberinterruption 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 Southsupply route

3. JANAF infigures

4. JANAF capacities Crudeoil transport in 2007 7,2 mil. tons 2008 6,3 mil. tons 2009 6,9 mil. tons 2010 6,4 mil. tons 2011 5,3 mil. tons 2012 5,6 mil. tons 2013 5,4 mil. tons 2014 5,0 mil. tons 2015 6,2 mil. tons 2016 again7 mil. tons ? 4

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

6. European oilpipeline system andsupplyroutesaround JANAF ADRIA JANAF

7. Competitivenessofoilpipelines Distance Tariffs Crudeoilpurchasecosts • 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 • A choiceofsupplydirection – economic, geopoliticalandotherfactors • 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

8. Crudeoilpricein $/bbl for thelast 3 months - crudeoilprice – the most importantfactorincompetitiveness, pricedifferencesdependuponquality, purchase place, CIF ,FOB, contracts - largerquantitiesofKazakh, IraqiandIraniancrudes on themarket - significantdifference is observed as to thepriceofcrudeoiltransportation – advantagegiven to themaritime transport - tanker portprovidesgreaterflexibility as regardspipelineaccessandcrudeoilpurchase( $$$ ) - increseincrudeoil transport by JANAF fromthe Omišalj direction is to berealisticallyexpected;arisingneeds

10. Competitive routes

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

12. New services / newpossibilities Activityof transport • Crudesrefinedin Europe (source: dr.sc.E.Cerić) • Crudeoilcharacteristics, adjustment to new era

13. New servicesWhyblending? • Requirements of users • Economic variable (mix/blend of cheaper and more expensive crude gives better financial result) • Possibility of changing crude specifications

14. DirecteconomicbenefitfromcrudeoilblendBlendKirkuk – Azericompared to REB in$/bbl

15. DirecteconomicbenefitfromcrudeoilblendBlendAzeri – Kirkukcompared to REB in$/bbl

16. Viewintothe future • Crudeoilmixingsuccessfullyperformed • Transport increase - increasingrole inEuropeansecurityofcrudeoilsupply • Constructionofnewstoragetanks • Reconstruction & UpgradeofStorageFacilitiesandInfrastructure at Omišalj Terminal

17. Terminal withcompleteservice!

18. Thankyou!