News

Oil supplies through the Druzhba pipeline

Kralupy nad Vltavou, 10 April 2012

Regarding the information related to the limitation of oil supplies through the Druzhba pipeline, we declare the following:

1. Concrete volumes of transported oil, including their schedule, are not known to the company MERO ČR prior to the realization of the transport itself, being subject to business negotiations between customers. Therefore, we cannot assess whether supplies are being limited. However, we can state that over the first 10 days of April, approximately 69% of the reported volume arrived through the Druzhba pipeline. However, this fluctuation is not uncommon.
2. According to available information, the Transneft company is prepared to transport all negotiated oil volumes that will fully cover the requirements of customers in the Czech Republic for oil transportation through the Druzhba pipeline (see the press release of the Transneft company from 10 April 2012).
3. The company MERO ČR inquired into the situation of other operators of the Druzhba pipeline and all are fully prepared to transport such a volume of oil as will be ordered by customers in the CR and supplied to the pipeline.
4. Provided that traders-suppliers of Russian oil do not want, for any reason, to supply oil through the Druzhba pipeline, oil purchasers on the territory of the Czech Republic have an opportunity to use for their oil supplies an alternative pipeline, IKL, which transports oil to the Czech Republic from a terminal in Trieste, Italy. MERO is also a major protector of state material reserves of oil, the stock amounting to approx. 1 million tonnes. This volume should cover for any fluctuations.

The meeting of OAO Transneft, a.s. and MERO ČR, a.s. held in Moscow.

On 18 August 2011, a meeting of OAO Transneft, a.s. and MERO ČR, a.s. representatives was held in Moscow. The meeting was organized in accordance with the agreed mechanism of bilateral cooperation contained in the Memorandum of Mutual Understanding of 2009. In particular, the meeting was about exchanging information on up-to-date issues of mutual cooperation and relationships between both companies.

At the meeting, the highest emphasis was laid on issues associated with oil transport through Druzhba pipeline, including the issue of ensuring stable deliveries of Russian oil to the Czech Republic. Problems of existing European pipeline systems were also discussed, as well as a number of aspects of mutual bilateral cooperation.

Representatives of both companies appreciated the present development of their bilateral relationships aimed particularly at ensuring stable deliveries via Druzhba pipeline from the Russian Federation to the Czech Republic.

New oil reservoirs at the central crude oil tank farm to support energy safety of the Czech Republic.

KRALUPY NAD VLTAVOU, 27 June 2011 – MERO ČR is ready to commence the construction of two new, high-capacity reservoirs for the storage of strategic oil reserves in the Czech Republic, which should be expanded from 90 to 120 days of mean consumption of the previous year. The new reservoirs would provide the advantage of utilizing the existing infrastructure of the central crude oil tank farm of MERO ČR in Nelahozeves. The higher level of strategic oil reserves will significantly enhance energy safety of the country.

MERO ČR is ready to initiate the construction of two new, high-capacity reservoirs for the storage of strategic oil reserves in the Czech Republic, as soon as the state, represented by the Administration of State Material Reserves of the Czech Republic, makes the decision to support safe and economic storage of a part of the Czech strategic reserves in terms of oil. Other such reserves in terms of oil products, particularly fuels, are stored at other places.

“Storage of strategic oil reserves at the central crude oil tank farm of MERO ČR provides high efficacy given that premises are available here with built infrastructure, including the connections of Druzhba and IKL pipelines, energy and water supply lines, our own automated fire protection system that utilizes water from Vltava River, experienced personnel operating the control system of the tanks and pipelines, as well as consistent protection of the premises against undesirable interventions of outer subjects,“ said Jaroslav Pantůček, director general of MERO ČR, a.s.

In the opinion of MERO ČR representatives, the proportion of the reserves of crude oil itself should be raised up to 60 days. “This time allows for redirecting and safely transporting crude oil from tankers on the sea to the Czech Republic via TAL and IKL pipelines,“ explained Jaroslav Pantůček.

The construction of the two new reservoirs, each with capacity for 125,000 m3, has been prepared completely in terms of technical aspects, including necessary documentation and valid building permit. The reservoirs can be erected within the present premises and use all services of the central crude oil tank farm in Nelahozeves. MERO ČR is also prepared to announce a tender to choose the construction contractor.

The management of MERO ČR met with Transneft president,
Nikolai P. Tokarev.

On 17 March 2011, the management of MERO ČR met with Nikolai P. Tokarev, president of the Russian company Transneft who came to visit Prague in the last days. President Tokarev was accompanied by M. M. Arustamov, the first vice-president of the company, and S. A. Chodyrev, chief of the foreign relations department. The meeting agenda focused on evaluation of cooperation between both oil transporters. The meeting was held based on the Memorandum of Mutual Understanding signed by the representatives of both companies in June, 2009. N. Tokarev informed the Czech partners of prospective Russian oil delivers abroad and particularly to the Czech Republic in the next period. Tokarev assured the Czech partners that Transneft would keep transporting sufficient oil amounts for its customers in the Czech Republic in accordance with agreed contracts. Mutual cooperation of both companies was evaluated as outstanding, one that shall be developed in the future, as well, in the interest of both contractual partners.

Grant Project of the ALFA programme.

In 2010, MERO ČR, a. s. together with VÚAM Vítkovice, VÚT in Brno and ČEPRO, a. s. submitted an application for the grant project of the ALFA programme announced by the Czech Technology Agency (CTA). The project was approved at the end of 2010. The 4-year grant (2011-2014) will be used to address the issues of integrity of the key elements of pipelines and tanks, divided to partial stages. The project is focused on selected critical parts of pipeline equipment, roofs, double bottoms and casings of the tanks so that its outputs provide information on efficient orientation of inspections and maintenance of operational units. Project outputs will also undoubtedly help to set new sophisticated trends and methodologies, particularly in the field of preventive and predictive maintenance and inspections of this equipment, which will bring a significant contribution also to protection of the environment.

MERO ČR AND TAL PROLONGED THEIR CONTRACT ON OIL TRANSPORTATION IN CRITICAL SITUATIONS.

After several months of negotiations in 2010, MERO ČR and TAL agreed on prolonging their contract that allows for using TAL pipeline to transport more oil for Czech refineries in critical situations related to Druzhba pipeline. In such cases, MERO ČR may use free transportation capacity of TAL pipeline also outside the usual system of long-term nominations, with no excessively high extra costs. The new amendment to the contract shall be in force until 2015. “The prolonged force of the contract between MERO ČR and TAL is of high importance for energy safety of the Czech Republic,“ said Martin Kocourek, Minister of Industry and Commerce of the Czech Republic. “The possibility to rapidly increase oil deliveries via IKL and TAL pipelines proved very effective in the second half of 2008 when we were feeling a lack of oil transported by Druzhba pipeline,“ added Kocourek. Martin Kocourek, Minister of Industry and Commerce of the Czech Republic, Václav Bartuška, Czech ambassador for energy safety, Sanders Schier, TAL’s director (Deutsche Transalpine Oelleitung GmbH), Jaroslav Pantůček, chair of the Board of Directors and director general of MERO ČR, and other important persons took part at the festive occasion connected with signing the amendment to the contract between MERO ČR and TAL on 23 November 2010 in Prague. The newly signed amendment is linked to a contract concluded between MERO Germany AG, subsidiary of MERO ČR, and TAL in October 2008 while its diction was reasonably applied also to the period from 1 July 2008, thus from the beginning of the critical situation in Druzhba pipeline. The contract of 2008 was in force until the end of 2010 and could be prolonged in the event of interest of both contractual parties.

Help to people affected by floods - MERO Raspenava

Help from the MERO company is directed to the town of Raspenava in the Frýdlant region that was seriously hit by the flash flood in August. The employees are personally involved in cleaning works, they bring the most important things with them: Work tools, barrows, shovels, brooms, buckets, rakes, cleaning and disinfecting aids, work clothes, shoes, raincoats, multivitamin and ion drinks. The project of Company Volunteering that MERO has been supporting since 2008 becomes topical and effective. Beside concrete physical and material help, the company management decided that it will also provide financial help to Raspenava.

Minsk agreement to enhance the safety of oil deliveries.

MERO ČR, a.s. completed its 3-year strategic project that will make it possible to enhance the safety of oil deliveries to the Czech Republic. Jaroslav Pantůček, director general of the company signed the Memorandum of Mutual Understanding with Gomeltransneft Druzhba in the Belarussian city of Minsk on 6 May 2010. The agreement will facilitate the transfer of information on oil transport via Druzhba pipeline.

“By signing the agreement, we made an important step toward prevention and forestalling of critical situations in oil transport to the Czech Republic from Russia. The stoppage of oil deliveries in January 2007 was the impulse that led us to establishing direct cooperation with all partners along the Druzhba pipeline route. We have gradually concluded agreements with all partners, and the safety enhancing process is now completed by this agreement with the Belarussian party,“ said Jaroslav Pantůček, director general of MERO ČR, on the occasion of signing the Memorandum.

The exchange of information on crude oil transport to the Czech Republic and particularly the provision of information on any critical situations related to oil transport through Druzhba pipeline is the main aim of their bilateral cooperation. Both parties are also planning to cooperate in mutual exchange of experience of operating oil infrastructure, and they will provide each other with detailed information on future strategic plans and prospects in the field of oil transport through Druzhba pipeline

MERO ČR has concluded similar agreements on cooperation and information exchange with other operators of Druzhba pipeline – Transneft in Russia, Ukrtransnafta in the Ukraine, and Transpetrol in Slovakia. By signing this last missing agreement with the Belarussian company Gomeltransneft, MERO ČR completed one of significant strategic projects important for national energy safety – building of a timely warning system with all operators of Druzhba pipeline along the whole oil transportation route to the Czech Republic.

ČESKÁ RAFINÉRSKÁ terminated the oil transport and storage agreement with MERO ČR.

KRALUPY NAD VLTAVOU, 11 December 2009 – Česká rafinérská, a.s. announced that it terminated the oil transport and storage agreement concluded with MERO ČR in 1996, while the 3-year notice period will start running on 1 January 2010

The oil transport and storage agreement between Česká rafinérská and MERO ČR was concluded in 1996 for at least 15 years, with the possibility to terminate the agreement from 2008 with a 3-year period of notice. The present agreement and contractual conditions will remain in force until the end of 2012. Oil transportation and storage for Česká rafinérská by MERO ČR is not affected in any way by termination of the agreement. Both companies will keep discussing new contractual conditions in the three years to come to arrive at conditions acceptable for both contractual parties

Česká rafinérská used the possibility to terminate the agreement in order to negotiate a new agreement during the 3-year period of notice, with conditions that will better reflect the environment in Europe and the adequacy of costs associated with providing individual services.

MERO ČR understands the decision of Česká rafinérská to terminate the oil transport and storage agreement as part of their business dispute in respect of the transport tariff of Druzhba and IKL pipelines. MERO ČR insists that the current tariff has been set properly. Costs that had to be spent for building IKL pipeline are reflected in the tariff, while building this pipeline was a condition of the first shareholders of Česká rafinérská (Agip, Conoco, Shell) at the time of their entering the company during the refinery privatization process in 1996. Through the preset tariff, MERO ČR only intends to cover its rightful costs for oil transportation including depreciations that will help the Czech state represented by MERO ČR to recover the resources formerly invested in IKL pipeline.

MERO ČR and Transneft signed the Memorandum of Mutual Understanding related particularly to the provision of mutual information on oil transportation via Druzhba pipeline.

KRALUPY NAD VLTAVOU, 18 June 2009 – MERO ČR and the Russian company Transneft signed the Memorandum of Mutual Understanding in Moscow, on Thursday, 18 June 2009. The document includes the obligations of providing mutual information on oil deliveries for the Czech Republic via Druzhba pipeline, including critical situations, and also on the plans of using Druzhba pipeline in the years to come.

Jaroslav Pantůček, director general and chair of the Board of Directors of MERO ČR, a.s., Libor Lukášek, director for strategic development and administration of MERO ČR, a.s., and Nikolai Petrovic Tokarev, president of OAO AK Transneft, Russian oil transportation company, signed the Memorandum of Mutual Understanding in Moscow.

The document contains particularly the agreement of both parties to inform each other of both the current and future status of oil deliveries to the Czech Republic through Druzhba pipeline. Both parties will also inform each other of the plans of using Druzhba pipeline in the years to come. Upon signature of the Memorandum, detailed expansion of all the issues agreed will follow; the parties are also expected to exchange their experience of operating pipelines in the Czech Republic and in the Russian Federation.

“The purpose of the Memorandum signed with Transneft is to be informed in advance of any particular situation in Druzhba pipeline in terms of oil deliveries and of any drop-outs of the deliveries. Thus we should jointly prevent situations that caused a drop-out of oil deliveries from the Russian Federation to the Czech Republic in the second half of 2008,“ said Jaroslav Pantůček, director general of MERO ČR, a.s.

“The signing of this Memorandum is in accordance with our long-term business strategy,“ emphasized Libor Lukášek, director for strategic development of MERO ČR, a.s.