1. 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,

2. Historical upstream consolidation: 1997 - 2014
Low oil price environment is an opportunity to acquire
Historical upstream consolidation:
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

3. 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

4. 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 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