Development plans and projects of SEE oil and gas companies – opportunities and limitations The growing role of JANAF in the security of supply of Europe’s oil to 2030 Goran Šaravanja, Chief Economist Zagreb, 24.03.2015

Historical upstream consolidation: 1997 - 2014 Low oil price environment is an opportunity to acquire Historical upstream consolidation: 1997 - 2014 Source: Bloomberg Notes: Data covers top ten acquisitions, acquisition/joint venture, merger and swap upstream transactions for each year Companies with strong financials will be in good position to acquire other firms and assets INA’s net debt is low below EBITDA providing scope for acquistions of assets abroad if the conditions are right Nonetheless, cost control and focus on efficiency will be necessary to leverage these benefits Source: IHS, PwC, Oil & Gas Financial Journal

US now an exporter of petroleum products (Mb/d) Regional refineries under very tight cost pressures going forward EU-16 refinery runs US now an exporter of petroleum products (Mb/d) Source: IEA Outlook for Eurozone economy remains weak Significant refinery capacity reductions in Europe over recent years, ~1.8mn b/d of capacity closed since 2008 Refineries in the region sub scale and lack complexity Russia refinery expansion focused on middle distillates European capacity currently >15mn b/d, total oil demand forecast to remain around 14.1mn b/d in 2015/16 Gasoline/diesel imbalance shows a chronic problem that will not be solved by cheaper crude The US gasoline imports sharply lower and exporting significant middle distillate volumes US refiners are among most sophisticated in the world while Middle East refiners enjoy different economics US Gulf coast has become a major export market for distillate and gasoline due to excess refining capacity Atlantic coast has seen some demand erosion, refining destruction and dependence on imports Latin America has become more dependent on US exports for gasoline and diesel Asia-Pacific remains global engine for demand growth Source: Bloomberg, IMF

Conclusion: INA will adapt to new market realities UPSTREAM DOWNSTREAM Croatian exploration and production will remain a pillar of INA’s upstream activities INA’s low net debt position has put the company in a position to buy production assets internationally, if the price and geology is right Focus on cost control, improving efficiency and boosting production – increase in domestic oil production in 2014 proves we can do it Refining capacity optimization is an important goal – the current, temporarily favourable environment provides additional breathing space to achieve it The refining industry in the region will be exposed to constant, tight cost pressure Profitability in the segment is likely to remain low – the aim is to make our refining business sustainable in the long term