Friday, 10 June 2022

New Croatian Oil Reserves Found, Exploitation to Begin Shortly

June the 10th, 2022 - New Croatian oil reserves have been discovered, and exploitation is set to begin shortly. As the country attempts to gain energy independence, this is no small piece of news.

As Poslovni Dnevnik writes, Marijan Krpan, President of the Management Board of the Hydrocarbons Agency, spoke about the situation on the oil market (which includes its derivatives) for HTV. He said that there had been no disturbances in the fuel supply, and enumerated the discoveries of new Croatian oil reserves. He also touched on distributor reactions:

"People's reactions are in regard to high prices, we can talk about the crisis when it comes to higher prices, but we can't talk about supply disruptions at the moment. If we're talking about the future, predicted at the global level, it's important to say that after COVID-19, the wheel of the oil industry has started turning again. Some encouraging new discoveries have been made globally in both Namibia and Guyana and along the coasts of West Africa. Billions of barrels have been found and that's now a completely different situation than it was one year earlier.

There may be some delays due to some technical difficulties at the local or regional level, but today we've had news from OMV that there has been an accident at their high-capacity refinery for this area, which covers 9.5 million tonnes of capacity. If they solve it in a short time, then there will be no problems, and if it lasts a long time, there will probably be some problems, but a solution will most likely be found for them,'' said Krpan.

When touching on the recent announcement from Petrol, which, after warning yesterday that it was facing a shortage of diesel and petrol on the market, said today that they had sufficient fuel supplies for a normal supply, Krpan said he wouldn't comment because it was a matter of business policy.

"They've entered into some acquisitions, they've done that here in Croatia as well, so it's certainly the volatility of the market and the events that have resulted in them being dissatisfied with the situation that is happening. It's very likely that they expected some other returns and a different development of the business situation,'' said Krpan.

Asked how he views the wide range of fuel prices across Europe, such as neighbouring Hungary's policy of limiting prices, Krpan said Petrol had actually even sued Slovenia for limiting prices.

“We haven't opted for this model, the Croatian model is a combination of the application of Government measures on base fuels, while additive fuels and premium fuels are still free of that sort of thing. It's important to say that the ratio of sales of both base and additive petrol (premium) is 50:50, while for diesel, 70% is base, 30% is additive. Companies still have space in that area to freely form their own prices,'' explained Krpan.

When it comes to expectations in the context of prices on the oil and derivatives market in the next period, he said that there will be high price volatility.

"If the embargo on Russia works, then we'll be facing a situation in which Russian quantities, because Russia is an objectively important exporter of oil and oil products to the European market, should be replaced from another area, most likely from the Middle East. We can expect very variable prices,'' Krpan pointed out.

The share of Croatian oil and gas production in total needs is unfortunately constantly falling. When asked if there have been any new Croatian oil reserves found, or gas explorations in sight, and if we can expect a higher level of energy sufficiency, Krpan said that as far as hydrocarbons are concerned, Vermilion has had two oil reserve discoveries in Vukovar-Srijem County.

"It's very likely that they will continue to drill even after it's been put into production. They have 7-8 localities where they expect positive results. INA also recorded a large volume with 3D seismic in the Drava valley and so we expect positive results from there as well. The American company Aspect, which operates on the Sava 6 block, also recorded a very large volume,'' said Krpan.

He added that we can expect production from these newly discovered Croatian oil reserves within a few years and that there is room for optimism.

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