JANAF’s Workshop: “JANAF Increasing Role in European Security of Crude Oil Supply by 2030”

25.03.2015. 14:03

Zagreb – On Tuesday, 24 March 2015, the workshop entitled: “JANAF Increasing Role in European Security of Crude Oil Supply by 2030, which was organized and hosted by JANAF, was held in Zagreb. The workshop gathered over a hundred representatives from national and European energy sector, as well as oil companies and suppliers with the aim of exchanging opinions, information and experiences on the latest developments and trends in the global and European oil industry.

The opening speech at the workshop was given by DSc. Dragan Kovačević, Chairman of the JANAF Management Board, who announced that JANAF’s business results in 2015 would be the best in the 40-year history of the company’s operation. Moreover, he considers that JANAF’s role, given the present geopolitical situation, will become more and more important. He has also informed that in the current year JANAF continues with major investment projects, primarily those related to construction of the subsea pipeline linking the Krk Island to the mainland, as well as upgrade of the Omišalj Terminal, that will open up new opportunities for company’s further development and successful business performance, together with increasing the share of revenues obtained from storage of crude oil and petroleum products and realization of the project of the Adriatic Centre for crude oil and petroleum products storage at Omišalj.

Dr. Jörg Köhli, the European Commission representative from the Directorate-General for Energy, has highlighted that European security of crude oil supply is one of key issues in the EU. The European Commission encourages the diversification of energy sources, placing an emphasis on renewable energy sources, but also on fossil fuels such as crude oil and gas. Köhli holds as crucial also the domestic production, which should diminish the dependence on others and therefore continuous investments are needed in the energy infrastructure, technologies and environmental protection.

Dr. Köhli characterized the domestic crude oil and gas production as being of great importance to Europe, both on the land (onshore production) and on the sea (offshore production), the latter being in rise. Furthermore, he has mentioned that the hydrocarbon exploration in the last years has been especially observed in the Mediterranean and on the Black Sea, where huge potentials have already been identified at some places and new production is expected. "Offshore hydrocarbon explorations continue in Spain and Italy, new resources are discovered also in Israel, Egypt and Tunisia, plenty of major international companies are working on it in the Mediterranean”, added Köhli, by reporting also the data that the Great Britain, for instance, has around 250 offshore platforms, the Netherlands around 140, Denmark almost 50, while Croatia has 19 such platforms. For those countries it brings new jobs and incomes that might be used for promoting education and other socially important sectors, pointed out Köhli.

Moreover, he has reminded that the EU Member States have few more months, namely until July of this year, for adjustment and application of the EU directive on safety for new offshore operations, for which two-year transposition period now expires, given the fact that such directive was adopted back in July 2013. “This directive directly influences and enables the offshore operations to be conducted safely, by applying the best practices, thus requiring from the Member States to consider the possibilities of licensing the safest mode of operation, new regulation of incidents and accidents and other”, concluded Mr. Köhli.

Croatian Minister of the Economy, Mr. Ivan Vrdoljak has pointed out that there is no national energy strategy, since the Croatian strategy is actually the European one, thus underlying the importance of cooperation with both neighbouring and other countries of South-Eastern Europe. “For us, as well as for other Member States, the domestic production carries great importance in every field and we ourselves should benefit from it, but it has to be used also by others”, said Mr. Vrdoljak. Furthermore, he sent a message that “we are not rich enough to renounce our own resources, and our own potentials respectively as concerns crude oil and gas production in Croatia, owing to which we will afterwards be able to make investments into education, science, industry and other sectors”. He believes that our aim is not to cut tapes, but to insure the energy stability of South-Eastern Europe. He further points out that the greatest risk lies in not making any decision at all and doing nothing, outlying the fact that even now we obtain 60 percent of our supplies through domestic gas and owing to new explorations, we will be able to satisfy our needs completely, as well as a part of needs of our neighbours in the region. He believes that Croatia, together with the neighbouring countries, should seriously develop the idea and project of the Adriatic spot market, and of turning respectively the Omišalj Terminal and Port, together with the Sisak Terminal, into the Adriatic trading centre for petroleum products.

The first panel discussion, with participation of the representatives of oil refineries from NIS, MOL, INA, OPTIMA Group and Unipetrol (PKN Orlen), resulted in conclusion that during the past years in all countries of the region the refining and consumption of petroleum products have been considerably declining, with the gasoline consumption seeing a steep decline, although the diesel consumption is slightly growing. Over the long term, a slight growth of petroleum products consumption is expected in the region, although it needs yet to be established to what extent it would influence the production, refining and transport of crude oil and petroleum products in the future. Furthermore, it has been determined that in 13 countries in the region there are even 34 oil refineries, of which six have been closed since 2011. The existing refinery system is characterized by an even lower level of capacity utilization, possible further shut down of some refineries, necessity of investing considerable funds into modernization of almost all existing refineries and certain survival of only the most modern and the most efficient refineries.

The second panel discussion, which included the representatives of all oil transportation systems from Central and South-Eastern Europe (Transnafta, MOL, Transpetrol, Czech MERO and JANAF), has shown that all those oil pipelines take a special care of their installation conditions and diversification of supply sources. The conclusion was made that possibilities of improved interconnections should yet to be considered and developed, at the multilateral level if possible. It has been expressly emphasised that the present capacity of the JANAF transportation system satisfies already all anticipated needs of supplying the existing and potential users on North and East route.

At the third panel discussion, attended by the representatives of several global and regional crude oil and petroleum products traders – Lukoil, Gazpromneft, Vitol and ENI, the attention was drawn to the existent already significant needs for storage tank farms for petroleum products in the Mediterranean and Adriatic areas, to which JANAF’s plans for increasing the storage capacities should be adjusted within very short term and providing the necessary infrastructure respectively in the Omišalj Port and Terminal, for which all required permits have already been obtained.

At the workshop closing, the conclusion has been reached that it is necessary to continue and extend the cooperation so far between all factors of oil industry in the wider region of Central and South-Eastern Europe in order to enhance the security of crude oil and petroleum products supply in the entire area, in which the role of Croatian JANAF (Adriatic Oil Pipeline) is unavoidable and indispensable.