Government of the republic of croatia signed 5 onshore production sharing agreements


Zagreb, 10th June 2016 – Croatian Prime Minister Tihomir Orešković and Minister of Economy Tomislav Panenić today signed 5 onshore production sharing agreements for the exploration and exploitation of hydrocarbons.
Agreements were signed between the Government of the Republic of Croatia and Canadian company Vermilion for exploration blocks DR-04, SA-08, SA-09 and SA-10 and with Croatian company INA-INDUSTRIJA NAFTE d.d. for exploration block DR-02, while the representatives of the Nigerian base company Oanda Plc are expected to sign a contract for the exploration block DR-03 in the following period.

Prime Minister Tihomir Orešković stated that onshore exploration and exploitation of hydrocarbons is one of the most important economic projects for the future of Croatia.

“I am especially proud since the signing of these agreements will ensure the future of an industry that has already had a decisive role in Croatia’s economic development” - said Prime Minister Orešković and added that Croatia today sends a strong message as a country that welcomes partnership with investors and a country that wisely manages its resources.

Minister of Economy Tomislav Panenić, emphasised the significance of the signed agreements and importance of the project for the region of Slavonia.

“Exploration and exploitation of hydrocarbons are very important projects that have the potential to enable sustainable economic development. Also, I am very happy as a Slavonian, because these agreements will bring economic growth to Slavonia and Baranja and all of Croatia."- said Minister Panenić.

President and CEO of Vermilion Anthony Morano thanked the Prime Minister and the Government of the Republic of Croatia for their support in the realization of the investment and added - "Vermilion is honored to now be a part of the Croatian economy, with its vibrant democracy, ‎strong institutions, and capable workforce. We look forward to being a long term investor in this country."

"Today's signing of the agreement is a step in the right direction: INA won the concession for the Exploration Block DR-02 on the basis of serious and high-quality offer and we are pleased that we have been recognized as a reliable investor. An opportunity to start a new cycle of investments in exploration of new fields and to expand our portfolio was opened for us. It is of course essential for the growth of our company, but also the entire Croatian economy. When in 2011 we lost our exploration concession, opportunities were very limited. However, we managed to optimize existing production fields and increase production, and in doing this we have shown that we have the knowledge and experience and we believe in success in this project as well. "- said Zoltán Áldott, President of the Management Board, INA-INDUSTRIJA NAFTE d.d.

These agreements are of strategic importance for the Republic of Croatia. The exploration period will last five years, and in the case of commercial discovery, exploitation period will last 25 years. Exploration activities will engage investments in amount of approximately 88 million EUR, while, the potential net revenue for the state budget in case of exploitation, depending on the proven oil and gas reserves, are estimated to reach an amount between 3.4 and 6.8 billion HRK on an annual basis.

Apart from the direct revenue for the state budget, strategic importance is reflected in the fact that the production of oil and gas can provide energy security and independence of the Republic of Croatia and bring significant benefits to the economy. It is necessary to point out the stability of energy supply together with development of direct and indirect industry. It is expected that investments in exploration and exploitation of oil and gas will be the driver of the local economy in terms of engaging local industry and suppliers as well as creating a new jobs.

Željka Rukavina