Which are the major projects within the area of oil and gas exploration and production in Croatia?
Being one of Croatia’s major investors, INA continues to develop further numerous investment projects in Croatia. Thus the recent intensified assessment activities in the area of conventional and nonconventional hydrocarbon resources for the exploration area sector in the Pannonian basin. In this sense we distinguish several exploration facility groups of different geological risk levels and expected reserves which will be the basis for capital investment in the coming years.
In 2010 the Selec-1 well in Savska potolina was drilled out and tested - the first well to be 100% funded by INA on shore in Croatia after a period of 4 years. By excavating the well an oil and gas reservoir with test results of 105 m3/day of suspended oil was discovered. The Selec site is an extension of the Žutica oil field. On the basis of the test results of Selec-1 well, a range of similar facilities within Northern Croatia will be tested.
Future injection and producing wells are tested in the Žutica oil field as part of the EOR project. By applying the tertiary oil recovery methods, this project, in which more than 500 million HRK will be invested in the next few years, will result in a significant production increase in the next 20 years.
Which are the major projects within the oil and gas exploration and production areas abroad?
Abroad we have concentrated on the areas of Syria, Egypt and Angola. In Syria INA participated in exploration and production activities on Jihar and Palmyra fields with peak production in 2011. In compliance with the Croatian Government Decision concerning restrictive measures against the Syrian Arab Republic INA announced force majeure in February 2012 and temporarily suspended all business activities in Syria until further notice, i.e. until the „force majeure“ circumstances cease to exist.
In Egypt INA takes part in the production process in four concessions: INA is the concession operator of the development concession East Yidma, while in the remaining three concessions it is a partner and does not act in the capacity of an operator.
At the end of 2010 two development wells were constructed as part of the WAG concession which started operating at the beginning of 2011, while the drilling of the next well is expected at the end of this year. In the middle of the year two wells were constructed as part of the Ras Qattara concession, one of which is an exploratory well and the other a development one. The drilling activities part of the North Bahariya concession commenced in June. Three wells have been drilled out, one exploratory and two development wells which showed the expected favourable test results and have been operational since the third quarter of 2011.
Due to good production results in Angola the operator Sonangol P&P has postponed the planned annual well work-over for the first quarter of 2012.
INA is present abroad also via its subsidiary companies, the members of
INA Group.
In which stage is the INA Refinery System Development?More than 4 billion HRK has been invested in INA Refinery System Development in the last several years. In Rijeka Oil Refinery three process facilities have been constructed: Hydrocracking complex setting – Mild Hydrocracking, hydrogen production and sulphur extraction as well as numerous auxiliary facilities and installations. The facilities have been commercially operational since May 2011. In the Sisak Oil Refinery three facilities have also been completed the sulphur extraction plant (the so called Claus plant), the hydro-desulphurization plant FCC and the Isomerisation Plant.
Which are the features of the EURO V quality fuel?
New EURO V fuels ensure full efficiency of the systems for exhaust gas processing built into vehicles in order to ensure fulfillment of very strict exhaust gas quality requirements according to the EU directives related to the protection of environment and human health. These requirements primarily refer to the reduction of carbon monoxide (CO), solid particles, hydrocarbon emission (CH) and nitrogen oxides (NOx) with the purpose of improving air quality. The fact that the quantity of sulphur has been reduced from 50 mg/kg (EURO IV) to less than 10 mg/kg (EURO V) is the best indicator of the difference between fuels. Among a number of parameters, it is the sulphur content which affects the efficiency of the systems for exhaust gas processing in vehicles and the level of exhaust gas emissions the most. In other words, by reducing sulphur in fuels, INA significantly reduces impact on the environment, improves cost-efficiency of oil processing and ultimately protects its consumers' vehicles. Since INA gives particular attention to environmental protection in all segments of its business, the EURO V quality products are one of its contributions to the overall efforts and activities in preserving the environment, reducing exhaust gas emissions and improving air quality. EURO V quality fuels (Eurosuper 95 BS and Eurodizel BS) are high-quality fuels which contain up to 10 mg/kg of sulphur, and fully meet European standards and can therefore be exported to European markets. EURO V fuel quality is the result of modernization and INA's constant investment into refineries.
How is the price of oil derivatives set?
The price of oil derivatives is set in accordance with the Regulations on Setting the Prices of Oil Derivatives, prescribed by the authorised Ministry. In accordance with the above Regulations, to set the highest mean price of oil derivatives, the average mean values of quotations "Mediterranean cargoes CIF Med" from "Platt's European Marketscan", as well as the average middle exchange rate for the dollar are used. Fees for financing the Compulsory Reserves Agency, excise duties, cost of primary storage and manipulation, compensations for roads and highways, and VAT, are calculated into the price. Price correction is done every 14 days.
Does the oil barrel price affect the retail price of oil derivatives?
The oil barrel price on the global market is not taken as a parameter for setting retail prices on the Croatian market, but instead, average price of derivatives on the Mediterranean market is taken. However, the immediately trends of oil prices affects the trends of oil derivatives prices and thus the prices on the Mediterranean market.
How is LPG price formulated?
The LPG price is formulated on the basis of average mean stock exchange quotation on the Mediterranean market, which represents a basis for the calculation of selling prices and the Croatian National Bank's average middle exchange rate for the dollar, in accordance with the Regulations on Setting the Prices for Liquefied Petroleum Gas, prescribed by the Ministry of Economy, Labor and Entrepreneurship.
According to the said Regulations, the LPG price consists of the basis for calculation of selling prices, variable costs for the product depending on its type, purpose and method of delivery, and costs for retail and wholesale trade.
According to paragraph 7 of mentioned Regulation, the LPG price for Otto motors on fuel stations on highways between payment tolls are formed freely and they are not the subject of the mentioned Regulation.
What is liquefied petroleum gas (LPG) and where is it used?
The commercial propane-butane gas is a mixture without color, taste or odor. It is not toxic, but in the case of high concentration, it reduces the levels of oxygen in the room. For easier use and transport, it is liquefied under increased pressure and placed in special vessels (bottles or containers). LPG is more and more used for different purposes, from households and industry to cars as a replacement and low-cost fuel. As an energy-generating product, LPG has outstanding ecological properties. Through direct combustion, without smoke, ash, tar or unpleasant odor and the absence of sulphur compounds, LPG contributes to reducing acid rains and other products of harmful gas emissions.
Why is LPG as a car gas an alternative derivative?
LPG has lower impact on greenhouse emissions than fossil fuels. LPG burns cleanly, has a high octane value and is ecologically acceptable.
BUSINESS
What are INA's financial results for the first quarter of 2012?
INA Group delivered strong results in first quarter of 2012. Net profit of HRK 630 million (excluding special items) in the first quarter of 2012 represents an improvement in comparison to the results from the last quarter, when the net profit amounted to HRK 248 million (excluding special items).
Results for the first quarter show that EBITDA (excluding special items) amounted to HRK 1.475 million, which represents a slight increase in comparison with the last quarter of 2011, when it amounted to HRK 1.328 million. Operating profit excluding special items amounted to HRK 834 million and has remained at approximately the same level as in the last quarter. Backed by a strengthened financial background, INA prepared a strong investment cycle for the coming period.
What are INA's further plans regarding the investments?
We are committed to remain one of the top investors in Croatia. The retail modernization program is being carried in an intensified manner, as a result of which by the end of 2012, INA will have the largest number of new or modernized filling stations in Croatia that will ensure maintaining our market leading position.
We are continuing with the modernisation of refineries in order to meet the strict European Union environmental protection requirements as well as to process high quality products in our own plants. After a number of large scale investments in the refineries have been completed in 2011, further investments are being carried out to increase operational efficiency.
INA also puts strong effort into exploration activities, aiming at drilling 4-6 exploratory wells in Croatia in 2012, meanwhile the EOR project is also in progress. Enhanced Oil Recovery Project, whose aim is the increase in production, is one of the largest investment projects for the present and the following several years. Approximately 200 million HRK has been invested in this project so far, and some additional 500 million HRK is expected to be invested in the next couple of years. Through this project we expect a production increase by 3,4 million tons of oil and 600 million cubic meters of gas in the next 20 years.
SOCIAL RESPONSIBILITY
How is INA’s social responsibility sustained within the community in which it conducts business?
INA’s way of conducting business is concentrated on creating benefits for the local communities and the society as a whole. Moreover we strive to develop a good collaboration with our stakeholders. We have developed a tradition of funding infrastructure for decades, particularly in the circles where INA has conducted oil and gas exploration and production. Building of schools, hospitals, health care institutions and resorts has been funded. INA helps communities in humanitarian, cultural, educational, sports, environmental, health care and scientific projects in the form of donations and sponsorship and invests in a range of non-profitable activities valuable in terms of the overall quality of life.
In business a great deal of attention is devoted to health and safety protection, environmental protection as well as respect for the laws and customs within our business areas. The guidelines comprising our approach to work, towards our business co-workers and partners are defined in the Code of Business Conduct and Ethics.
INA d.d. is a member of the United Nations Global Compact, the largest framework encouraging businesses to adopt corporate social responsibility. By implementing the Ten Principles of the Global Compact , INA supports and promotes in its operation the basic social values from the areas of human rights, labour rights, environmental protection and anti-corruption. We regularly annually inform our stakeholders about our progress within the area of social responsibility and we are also part of the global network communication Communication on Progress.
How does INA choose the projects to support?
When choosing projects which it will sponsor or to which it will contribute by donations INA, d.d. is primarily guided by the criteria of the project’s high level of benefit for the wider community and the society needs. We seek out to offer help and support to both children and young people, individuals with special needs, scientific, innovative and cultural projects, projects that contribute to health and environmental protection and development, sports professionals and non-professionals alike as well as projects important for the local communities within which INA operates.
Which projects did INA support in 2011?In its capacity as a sponsor INA has supported numerous cultural, sports and educational projects this year as well. We have continued to care for the most vulnerable social groups, such as children lacking the respective parental care and individuals with special needs.
We are the proud sponsor of INA Youth Sports Games, the largest non-professional sports competition in this part of Europe for which this year alone 80 000 children signed up. Under the slogan ‘’Living our life without drugs since drugs take lives away’’ INA Youth Sports Games have conveyed a powerful message to children encouraging them to spend their free time meaningfully and wisely and to understand the importance of sports and healthy life. Rijeka Open Tennis Tournament as well as the Croatia Open – Umag were also held under INA’s patronage, the 12th International Sailing Regatta Fiumanka, the 41st Youth Sailing World Championship (Zadar), the traditional International Cycling Race „41. Memorijal Stjepan Grgac“, as well as other sports competitions and events.
Among the numerous cultural events we would like to point out our patronage of Ivo Pogorelić’s concert at the Vatroslav Lisinski Concert Hall, the opera ‘’The Power of Fate’’ in the Croatian National Theatre ‘’Ivan pl. Zajc’’ in Rijeka, the ballet programme of the Rijeka Summer Nights Festival, the performance of the National Folk and Dance Ensemble Lado at the Dubrovnik Summer Festival, the ballet ‘’Zorba the Greek’’ at the Split Summer Festival, as well as the theatrical performance „Actors in Zagvozd“.
We continuously provide care to the ones who need our help the most, namely the children in the SOS Children’s Village Lekenik and Ladimirevci which we have helped a number of times. We are happy we were able to organise for them summer holidays in Rogoznica and that with the help of our subsidiary company Maziva Zagreb, the donation project powered by the sales of our summer windscreen washer fluid came into being; similar initiatives were held in previous years too. Under the motto ‘’Happy and articulate back to school“, we donated 100 000 HRK to the association SOS Children’s Village Croatia which enabled the help of speech therapists and defectologists for some fifty children with speech problems. We also helped the Zagreb Autism Centre and the Home for abandoned children ‘’Olive’’ in Dubrovnik.
INA has also supported professional events: the 26th International Scientific & Expert Meeting of Gas Professionals, the 11th Croatian Conference on Quality and the 2nd Scientific Assembly of the Croatian Society for Quality, The Central-Eastern Europe & Caspian Scout Group (CEEC) meeting as well as the traditional annual meeting of Croatian Entrepreneurs – The Entrepreneurs’ Day.
INA has always been willing to provide help in various educational projects and programmes. It was one of the first to participate in the initiative Top Scholarship for Top Students awards which it supported for a tenth consecutive time this year. We have opened our doors to many high-school and university students from Croatia and abroad to help them obtain new knowledge during their summer practice.
We have also supported other initiatives related to education, training and professional development.
We have awarded the best students in environmental projects within the framework of a mutual project between INA and Novi list "INA for the young ones“, scholarships have been awarded for the ‘’most spirited student’’ projects.
And last but not least, in partnership with the Trust Fund for Humanitarian Demining „Mine-free Croatia“ we have initiated the project ‘’Mines concern me too’’ , while earlier we donated 500 000 HRK to the Trust Fund for demining of mine suspicious areas in the Stari Jankovci Municipality.
HUMAN RESOURCES
What kind of employees does INA seek?Considering the size and complexity of the company and the broad range of our activities, we need employees of different professions and education. We are aware that every successful company story is based on work, entrepreneurship and creativity of the employees. The point of investment is not only to invest into technologies and innovations, but also into competence development systems which will create the environment in which every individual would have the opportunity to show his or her talents, skills and ideas.
From its employees, INA requires maximum commitment, taking initiative and risks, adjusting to changes, decision-making, cooperation and teamwork, quick information exchange, trustworthiness, respecting consumers, suppliers and colleagues, assuming responsibility and participating in joint actions, monitoring performance...
Our managers' most important duty is to facilitate maximum development and use of human potential as the principal resource and source of INA's competitive advantage.
Within its business activities, INA pays particular attention to education and professional training of its employees at all levels. To this end, it cooperates with educational institutions which meet the highest standards, and hires and develops an increasing number of internal educators who, owing to their experience, knowledge of the organization and competences, deliver high-quality, structured trainings.
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