The government of the republic of Croatia approved signing of 6 onshore production sharing agreements


Zagreb, 8th June 2016 – In today’s session the Government of the Republic of Croatia adopted a decision on the approval of production sharing agreements for exploration and exploitation of hydrocarbons for 6 onshore exploration blocks.

Croatia’s 1st Onshore License Round was opened in July 2014 and 6 onshore exploration blocks were offered, covering the area of the Drava, Sava and Eastern Slavonia, with a size ranging from 2,100 to 2,600 square kilometres.

Upon closing of License Round and performed evaluation of bids, the Croatian Government awarded licences for exploration and exploitation of hydrocarbons. Licence for exploration block DR-02 was awarded to INA-INDUSTRIJA NAFTE d.d., a Croatian company, exploration block DR-03 was awarded to Oando Plc, a Nigerian company, and Canadian company Vermilion was awarded with four licences for exploration blocks DR-04, SA-08, SA-09 and SA-10.

Awarded licences were a prerequisite for the start of negotiations with the selected bidders to conclude production sharing agreements. Upon completion of negotiations, the Croatian Government adopted a decision for the approval of production sharing agreements and authorized the Minister of Economy, Tomislav Panenić, on behalf of the Croatian Government, to sign agreements with the selected bidders.

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