JANAF Oil Pipeline & Storage Company

JANAF Oil Pipeline & Storage Company

JANAF IN EUROPEAN OIL PIPELINE NETWORK 2 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 3 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 4 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 5 Omišalj Terminal 240.000 m 3 (crude oil) Sisak Terminal 240.000 m 3 (crude oil) Žitnjak, Zagreb Terminal 100.000 m 3 (petrolum products)

6 JANAF OIL PIPELINE & STORAGE SYSTEMS COMPANY PROFILE 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. m 3, of which 640 mil. m 3 was put in operation in 2013&2014 Small shareholders 5% DUUDI / RH 11% INA 12% CERP 26% Petroleum products: Omišalj, Žitnjak-Zagreb Capacities: 200.000 m 3, of which 100 mil. m 3 was put in operation in 2014 HEP 5% DUUDI / DAB 4% DUUDI / HZMO 37%

OMIŠALJ TERMINAL 7 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 m 3 /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 m 3 for crude oil (of which 240.000 m 3 for compulsory stocks) and 60.000 m 3 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 8 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 m 3 of which 240.000 m 3 is intended for storing the national compulsory stocks VIRJE TERMINAL Crude oil tank storage capacity 40.000 m 3 SLAVONSKI BROD TERMINAL Pipeline forks into two branches toward: Serbian refineries Brod Oil Refinery in B&H

ŽITNJAK TERMINAL, ZAGREB 9 Terminal modernization and construction of new storage tanks 2010-2014 Tank storage capacities for petroleum products storage amount to 140.000 m 3 of which 100.000 m 3 is intended for storing the national compulsory stocks

WHAT DOES JANAF OFFER TO OIL COMPANIES? 10 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

11 OIL MARKET OF SOUTH-EASTERN AND CENTRAL EUROPEAN COUNTRIES Gravitation oil market 15-28 MTA (2012/13) Oil consumption, 2012/13, mil.tons Oil consumption, 2025, mil. tons 9,26 6,51 3,25 4,00 3,45 2,10 Croatia Bosnia & Herzegovina Serbia Hungary Slovakia Czech 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 Czech Republic 7,82 7,85 Slovakia 5,13 5,41 Hungary 6,10 5,95 Serbia 1,59 3,80 Bosnia & Herzegovina 1,10 1,02 Croatia 2,46 3,37 Data Sources: EU, EZ & EIHP

CHALLENGES 13 Many challenges SE & Central European countries: Slow economy growth and recessions Oil consumption decrease Refinery modernization slower than expected, threats of refineries shut down 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 JANAF Users 12 Existing users - MIL. TONS 10 Croatia Petroleum products consumption decrease 8 6 4 2 Bosnia & Herzegovina Serbia Hungary Potential users Slovakia EU Countries 0 2005 2010 2012/13 Czech Republic

REFINERIES 15 EU refinery closures to date SE European refinery modernization slower than expected, threats of refineries shut down 3,5 3,0 5 of the 6 SEE refineries are under threat of change in operating model or even closure 2,6 SEE Refinery Health Check Results 2,4 2,3 2,3 2,2 1,7 World class EE best practice Source: AT Kearney

1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 20140917 20150312 2016 (Forecast) UNCERTAINTIES / RISKS 16 Political risks 120,0 100,0 80,0 60,0 40,0 20,0 0,0-20,0 Crude Oil (Fortes/Brent; $/bbl)

EU - OIL & ENERGY SUPPLY SECURITY 17 Oil is to be dominant energy source in EU for many years Oil dependency (%) 40,0% 30,0% 20,0% 10,0% 0,0% -10,0% 100,0 80,0 60,0 40,0 2000 share of total 2015 share of total 2025 share of total 20,0 0,0 2000 2010 2025 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 18 Revenues structure of core businesses, 2014 (%) Diversification strategy Petroleum products storage 11% Improvement of capacity utilization Crude oil storage 21% Oil transportation 68%

JANAF ANSWERS TO CHALLENGES 19 Investment in projects of environmental protection as well as in projects of human recourses and equipment safety and protection The aims: - - to increase security of transport and supply - - to prolong pipeline life time System modernization (SCADA, GIS, Electricity system,.) Integrity pipeline control and repairs Technical protection, etc. Presently, Construction of subsea oil pipeline linking the island of Krk and the mainland, which should replace the existing crude oil transport through the Krk bridge (2015-2016)

NEW STRATEGIC DEVELOPMENT PROJECTS 20 Omišalj Terminal Reconstruction & Upgrading Infrastructure and Crude Oil/Petroleum Products Tankfarms Projects The purpose: to improve Terminal operations and capacity utilization & interoperability Further increase of storage activities and oil transport is expected Potential new investment: Oil storage tanks capacities of 400.000 m 3 (5 X 80.000 m 3 ) at Omišalj Terminal and 160.000 m 3 (2 X 80.000 m 3 ) at Sisak Terminal (location permit issued) Petroleum products storage tanks capacities of 100.000 m 3 at Omišalj Terminal and 60.000 m 3 at Žitnjak Terminal (location permit issued) Strategic partnership between JANAF and oil companies

CONCLUSION 21 JANAF has capacities, strength and possibilities for growth JANAF has significant role in oil supply security of Central & SE European countries JANAF offers to oil companies: Available pipeline and storage capacities for oil & petroleum products Access to oil market/ refineries in 6 countries (9 refineries) 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, Serbia, Hungary, Slovakia and Czech R. JANAF has long-term and extensive experience in oil business JANAF must go on with development of new projects Company is open for cooperation on new commercial businesses and 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 22 E - mail: janaf@janaf.hr Web: www.janaf.hr