Hydrocarbon Agency promoted the newly signed exploration contracts as a turning point in domestic production
Exploration of new sources of oil and gas in Slavonia will be conducted in the next three to five years, while production is realistically expected in five years, Management President Barbara Dorić of the Hydrocarbon Agency said, Tportal.hr reports on June 14, 2016. New sources should halt the fall of domestic production and renew investments missing in the last 20 years, Dorić said to media at a press conference.
Contracts for exploration and division of hydrocarbon in five land fields were signed on Friday with representatives of INA and Canadian Vermilion Energy. The contract for the sixth field with Nigerian Oando Plc is expected this week.
Around half a billion Kuna income is expected in the first five years from research. In the case of new production, financial benefits from division of oil and gas with investors could bring in between 3.4 and 6.8 billion Kuna annually. The amount currently generated from oil and gas fields amounts to 600 million Kuna, Dorić emphasized.
The current royalty model is being replaced with a hydrocarbon division model where the state is in a joint undertaking with the investor, with the investor bearing the risk. If there is a financially viable finding and production, the investors pays a tax on total production, with the production amount divided between them and the state.
During the entire exploitation period, the state’s share of profit is 60%, while in the classic royalty model it’s only 6%, Dorić says. She noted that strict care of environmental protection is being observed in all phases of research and exploitation.
Economy Minister Tomislav Panenić rated today’s ecologically inspired protests as politically motivated. He added that to-date experience with oil and gas exploitation in Slavonia has been positive. “Residents of Slavonia are not against drilling and protests politically engineered,” says Panenić. He announced that any new oil belonging to the state would be processed in domestic refineries.
Asked about the future of oil and gas exploration in the Adriatic, Panenić said this is not currently acceptable as tourism is favoured. Such projects are not viable, as their profitability is at 100 USD per barrel, while the Slavonia option is viable at 40 USD per barrel.
Regarding the construction of Plomin C thermal energy plant, he said the project has practically been halted and announced investments in thermal energy in Zagreb and Osijek.
