m11 FR

Module 11 – Petroleum
FINAL REPORT
Project title: Energy Sector Study in BIH
Project number: BHP3-EES-TEPRP-Q-04/05 WB
Country: Bosnia and Herzegovina
WB Consultant: The Consortium:
Energy Institute Hrvoje Požar, Croatia
Soluziona, Spain
Economics Institute Banjaluka, BIH
Mining Institute Tuzla, BIH
Contact persons: Haris Boko Davor Bajs
Telephone: ++ 385 1 6326 165 ++385 1 6326 102
Fax: ++ 385 1 6040 599 ++ 385 1 6040 599
e-mail: hboko@eihp.hr dbajs@eihp.hr
Date of Report: March 31st 2008
Authors of Report: Goran Granić (Team Leader), Mladen Zeljko (Electric Power
expert), Idriz Moranjkić (Coal Sector expert), Jose Andres Martinez (Oil and Gas
Sector Expert), Marisa Olano (Expert for Renewable Sources), Željko Jurić
(Environmental Expert)
Module Leader
Robert Fabek, M.Sc.
Authors
Robert Fabek, M.Sc.
Damir Pešut, M.Sc.
Sanja Živković, Ph.D.
PROJECT TASK
THIRD ELECTRIC POWER RECONSTRUCTION PROJECT: ESSBIH

I
In the framework of the BIH Energy Sector Study, the oil and petroleum product sector plays
an important role, especially in the light of re-establishing operations in the Bosanski Brod
Refinery as one of the most significant refineries in the BIH oil industry: Within this Module,
an in-depth analysis of the oil and petroleum product sector is envisaged, including the
preparation of recommendations for the sector's improvements. In more detail, the principal
purpose and objectives of this Module are to:
• Collect and review relevant studies, projects, analysis, and available data as to
develop an overview of the oil sector in Bosnia and Herzegovina in order to
determine at what extent the current supply system meets demand in the country
as a whole in terms of quantities, quality, import, consumption and stock levels;
• Collect data on consumption from relevant institutions and data on the present and
required quality of petroleum products;
• Analyze the situation in the Bosanski Brod Refinery in light of the expected plan to
reconstruct and modernize the refinery capacities with the intent of harmonizing
quality standards with the EU norms;
• Carry out a survey by means of a questionnaire in order to collect data relative to the
petroleum product sector (e.g., number of vehicles and consumption by vehicle or
household);
• Review the current price regimes and price benchmarking with the EU and
surrounding countries, with special attention to benchmarking the shares of taxes,
excise duties and other levies in price of petroleum products with the EU countries
and the Republic of Croatia in order to determine if the petroleum products prices
reflect actual economic and financial costs, and if necessary to define the
recommendations on petroleum products retail prices setting;
• Review legal regulation on petroleum product quality, prices, safety and
environmental protection ad comparison with the EU and Croatia;
• Forecast petroleum product demand in the period until 2020 with five-year overviews
(2010, 2015 and 2020) for three scenarios presented in Module 1 and in the
interactive process with definition of energy balance projections (the aim is to
ensure consistency of these projections with demand trend projections regarding
other energy products);
• Analyze and comment on results, conclusions and recommendations of the Oil Import
Study, prepared by the World Bank in 1999, where one of the key
recommendations, where projected import is concerned, was to increase
purchases of petroleum products on the Mediterranean market and to use the
storage capacities in the port of Ploče in the vicinity of rail transport terminal that
is located more closely to the consumption centers, and to reduce the portion of
imports by road corridors with the aim to significantly reduce costs and increase
quality of supply;
• Analyze the relevant aspects of the compulsory stocks of oil and petroleum products
in accordance with the EU and IEA requirements, recommendations on
establishing compulsory stocks of oil and petroleum products and assessment of
required quantities of oil and petroleum products in BIH on the basis of energy
balance projections until 2020, determining volume of required storage capacities,
and assessment of required investments in storage capacity development.
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SUMMARY

III
Module 11 covers the petroleum sector and petroleum industry in Bosnia and Herzegovina.
The initial activities of this Module report were related to the overview of the current situation
in the petroleum sector and its in-depth analysis. For this purpose, visits were made to the
Bosanski Brod Oil Refinery and Modriča Lube Refinery. The refining plants in Bosanski Brod
include two technological lines with the total processing capacity of 4,320,000 tons of oil per
annum. A detailed overview of technological characteristics of both processing units is given.
The old line is presently fully operational, with the capacity of 1,320,000 tons a year but in the
past period the production was discontinued due to lack of financial funds, and the line
functioned at a very low level of capacity utilization. The new oil processing unit, with a
planned capacity of processing 3,000,000 tons of oil per annum and a minimum daily
production capacity of 5,500 tons a day was installed in 1991 and was put in trial operation.
The beginning of war prevented the start of the new processing line and after the war its
startup was put off because of the damages suffered during the war and lack of financial
means. With the privatization of the Refinery, when the Russian oil company NefteGazInKor
became the new owner, works were undertaken to re-establish the continuous production
process. On the other hand, the Modriča Refinery maintained continuous production, but with
relatively low capacity utilization which is largely due to the lack of feedstock from the
Bosanski Brod Refinery.
On the basis of investment plans of the Modriča Refinery, the plan is to put in function all
installed production capacities for 120,000 tons of oil and lubricants a year. The planned
investments in the modernization of the Bosanski Brod Refinery, and Modriča Refinery and
the, distribution network of the Petrol Banja Luka Company, together with the construction of
the railway line Bosanski Brod – Modriča amount to 279.2 million EUR.
The petroleum product market in BIH is almost fully dependent on import which was one of
the crucial aspects to be studied. According to available data, petroleum product
consumption in Bosnia and Herzegovina ranged from about 800,000 tons in 2000 to 1.3
million tons in 2005. The petroleum products were mostly imported from Croatia, Serbia,
Montenegro, and Hungary. In the final petroleum product consumption structure, transport
has by far the highest share of almost 70%, followed by industry with 12% share, households
with 10%, agriculture with 8% and services with only 2%. The consumer structure, where
individual types of petroleum products are concerned, is determined on the basis of a survey
carried out in both entities and in the Brčko District and on the basis of data received from
relevant institutions. The survey included 4,000 households and 739 industrial and service
companies.
In Bosnia and Herzegovina there are currently more than 800 service stations. A great deal
of these stations was put into business after the adoption of the Law on Self-employment in
1990. In terms of competitiveness, such a number can be considered as acceptable, but in
terms of cost efficiency they are rather poorly rational investments. As a consequence, a
certain number of these facilities are operating at a minimum profitability margin, and some
of them have been closed down. Similarly to the situation in war period, the highest market
share is held by INA Zagreb, through its daughter companies Holdina Sarajevo, Interina
Mostar, and Energopetrol Sarajevo.
Significant explorations of oil and gas reserves were carried out since the 1960s until the
early 1990s by the Sarajevo-based company Energoinvest, Zagreb-based INA-Naftaplin,
foreign companies such as AMOCO, EXLOG, GECO, ECL, and others. Extensive
geochemical, geomagnetic, geoelectric explorations were conducted as well as reflective
seismic studies and magnetic telluric probing. Based on the current level of explorations it is
considered that there are reserves estimated at 50 million tons of crude in four priority areas:
• The area south of Bosanski Šamac with estimated reserves of 9.2 million tons;
• The area southwest of Orašje with estimated reserves of 6.1-15.5 million tons ;
• The River Tinja area in the Tuzla region with estimated reserves of 14.3 million tons;
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• The area around Lopar of around 21 square km with estimated reserves of 11.9
million tons.
Furthermore, the analysis of legal regulation with regard to petroleum product retail price
forming, petroleum product quality and environmental protection issues. The petroleum
products price setting regime in Bosnia and Herzegovina is compared with the relevant
regime in Croatia and the EU.
It must be noted that in Bosnia and Herzegovina there is a so-called “free price forming
regime”, which means that prices are determined by the market. Compared to the EU
countries, the petroleum product retail prices in BIH are significantly lower, but it is only due
to lower excise duties and taxation levels. If net prices are compared, the BIH prices are
somewhat higher than those in the EU countries.
A particular overview was made with regard to legal regulations concerning quality of liquid
petroleum fuels in the European Union, Croatia and Bosnia and Herzegovina. Croatia has
mainly harmonized its regulations with the EU Directives, though it is possible to produce and
sell, during a certain period of time, some quantities of petroleum products that diverge from
the EU standards. The Republic of Bosnia and Herzegovina set out the quality standards for
liquid petroleum fuels, which are harmonized with the EU standards. However, during a
certain period of time, fuels produced in BIH may deviate from the EU standards.
In the light of the fact that safety and environmental protection are critical issues in the
activities related to the oil industry, environmental legislation of the EU, Croatia and BIH is
described in details. We analyzed the legislations in the aspect of air pollutant emissions,
water pollutants, waste management and safety and risk management.
The issue of security of petroleum product supply, which is exceptionally important today, is
analyzed in terms of compulsory stocks of oil and petroleum products under the EU
regulation, but also from the point of view of the IEA countries' compulsory stocks system.
The purpose of the obligation to maintain 90 day reserves of oil and petroleum products is to
ensure the supply to the key subjects and to adequately respond to internal or external
disruptions of supply. Compulsory stocks management is an essential element of emergency
response in cases of supply disruptions. With a detailed overview of the EU and Croatian
legislation, we studied the different compulsory stocks systems in the European countries
and gave recommendations for establishing the Compulsory Stock Agency in BIH which
would be responsible for the development of storage capacities and setting stocks in a given
period of time. The required quantities of compulsory stocks in the frame of the EU
regulations are calculated for BIH and separately for both entities and the Brčko District on
the basis of projected petroleum product demand until 2020. The compulsory stocks of oil
and petroleum products for BIH in 2010 would be ca 320,000 tons, and 450,000 tons in
2020, while total investments in required storage capacities would amount to 183,350,000
EUR.
The analysis of the results and recommendations of the Oil Import Study made in 1999 is
carried out mainly from the aspect of petroleum product transport, because other
recommendations, regarding quality and quality control and equalization of excise and
taxation levels, have been mostly implemented. The major petroleum product importers to
some extent use the railway line from the port of Ploče, as the Study recommended, but
regardless of the dispersed consumption pattern, a large number of service stations and
relatively small distances, it is not realistic to expect a significant reduction in share of road
transport in the petroleum product strategy in BIH.

V
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VI
CONTENTS
PROJECT TASK ....................................................................................................................... I
SUMMARY.............................................................................................................................. III
CONTENTS ...........................................................................................................................VII
1. INTRODUCTION ................................................................................................................. 1
2. OVERVIEW OF THE OIL SECTOR ..................................................................................... 3
2.1. Bosanski Brod Oil Refinery ....................................................................................... 4
2.1.1. Configuration of old line and production potentials ............................................ 4
2.1.2. Configuration of new line and production potentials........................................... 6
2.2. Modriča Lube Refinery ............................................................................................ 12
2.3. Petrol products market in Bosnia and Herzegovina................................................. 14
2.3.1. Import and export of petroleum products ......................................................... 14
2.3.2. Overview of petroleum product consumption in Bosnia and Herzegovina........ 17
2.3.3. Overview of petroleum product consumption in FBIH ...................................... 21
2.3.4. Overview of petroleum product consumption in the RS ................................... 21
2.3.5. Overview of petroleum product consumption in the Brčko District ................... 21
2.3.6. Trade and distribution of petroleum products in Bosnia and Herzegovina ....... 22
2.4. Analysis of results and recommendations from Oil Import Study (World Bank
1999)................................................................................................................... 23
2.5. Petroleum product consumption structure ............................................................... 25
2.5.1. Petroleum product consumption structure in BIH............................................. 25
2.5.2. Analysis of petroleum product consumption structure in FBIH......................... 29
2.5.3. Analysis of petroleum product consumption structure in RS ............................ 33
2.5.4. Analysis of petroleum product consumption structure in the Brčko District ...... 37
2.6. Forecasting of petroleum product consumption in BIH until 2020 (according to
scenario S2-reference)........................................................................................ 41
2.6.1. Forecasting of petroleum product consumption in BIH until 2020 (according to
scenario S2-reference) ................................................................................................... 45
2.6.2. Forecasting of petroleum product consumption in RS until 2020 (according to
scenario S2-reference) ................................................................................................... 49
2.6.3. Forecasting of petroleum product consumption in Brčko District until 2020
(according to scenario S2-reference).............................................................................. 52
2.7. Exploration of oil and gas reserves ......................................................................... 55
3. OVERVIEW OF THE CURRENT PRICE SYSTEMS AND COMPARISON TO THE EU
COUNTRIES ..................................................................................................................... 59
3.1. Petroleum product pricing in the Republic of Bosnia and Herzegovina.................... 60
3.1.1. Bosnia and Herzegovina's legal framework on tariffs ...................................... 60
3.1.2. Legal framework of Bosnia and Herzegovina on excise duties on oil and
petroleum products......................................................................................................... 60
3.1.3. Law on Value Added Tax ................................................................................ 61
3.2. Pricing of petroleum products in the Republic of Croatia ......................................... 62
3.2.1. Legal framework for special taxes (excise duties) on oil and petroleum
products in the Republic of Croatia ................................................................................. 64
3.3. Petroleum product price setting in the EU ............................................................... 65
3.3.1. Legal framework of the European Union on excise duties (special taxes) on oil
and petroleum products .................................................................................................. 68
3.4. Comparison of price setting in BIH, Croatia and the EU .......................................... 70
4. REGULATORY FRAMEWORK.......................................................................................... 73
4.1. Quality of liquid petrol products ............................................................................... 74
4.1.1. Legislation on the quality of fuels in the EU ..................................................... 74
4.1.2. Legal regulation on the quality of fuels in Croatia ............................................ 75
4.1.3. Legal regulation on quality of fuels in Bosnia and Herzegovina ....................... 75

VII
4.1.4. Summary of regulatory framework for the quality of fuels in the EU, Croatia
and Bosnia and Herzegovina.......................................................................................... 77
4.2. Safety and protection of environment...................................................................... 77
4.2.1. Air pollutant emissions .................................................................................... 78
4.2.2. Pollutant emissions into water ......................................................................... 80
4.2.3. Waste management ........................................................................................ 81
4.2.4. Safety and risk management........................................................................... 82
4.2.5. Summary of the environmental regulatory framework in the EU, Croatia and
Bosnia and Herzegovina................................................................................................. 84
4.3. Compulsory stocks of oil and petroleum products ................................................... 84
4.3.1. Regulative framework of the EU countries regarding compulsory stocks of oil
and petroleum products .................................................................................................. 85
4.3.2. IEA oil and petroleum product compulsory stocks system ............................... 86
4.3.3. Legal framework for stockholding of oil and petroleum products in Croatia ..... 87
4.3.4. Legal framework for stockholding oil and petroleum products in Bosnia and
Herzegovina ................................................................................................................... 88
5. ANALYSIS OF COMPULSORY STOCKS OF OIL AND PETROLEUM PRODUCT
SYSTEMS ......................................................................................................................... 89
5.1. Compulsory stocks system in selected EU member states and the Republic of
Croatia ................................................................................................................ 91
5.2. Analysis of compulsory stocks of oil and petroleum products of BIH in the
period until 2020 in the view of the EU legislation................................................ 93
5.2.1. Investments in storage capacities for oil and petroleum product compulsory
stocks of the Republic of Bosnia and Herzegovina ......................................................... 95
5.3. Analysis of compulsory stocks of oil and petroleum products of the Federation
of BIH for the period until 2020 in the view of the EU legislation.......................... 96
stocks of the Federation of Bosnia and Herzegovina ...................................................... 98
5.4. Analysis of compulsory stocks of oil and petroleum products of the Republic of
Srpska for the period until 2020 in the view of the EU legislation......................... 98
stocks of the Republic of Srpska................................................................................... 100
5.5. Analysis of compulsory stocks of oil and petroleum products of the Brčko
District for the period until 2020 in the view of the EU legislation....................... 101
stocks of the Brčko District............................................................................................ 102
5.6. Recommendations for establishing a compulsory stocks system .......................... 103
6. REFINERY CAPACITIES IN THE REGION ..................................................................... 105
6.1. Bosanski Brod Oil Refinery ................................................................................... 106
6.2. Sisak Oil Refinery ................................................................................................. 106
6.3. Rijeka Oil Refinery ................................................................................................ 107
6.4. Pančevo Oil Refinery ............................................................................................ 107
6.5. Novi Sad Oil Refinery............................................................................................ 108
7. CONCLUSIONS AND RECOMMENDATIONS ................................................................ 113
8. REFERENCES ................................................................................................................ 117
9. LIST OF TABLES ............................................................................................................ 125
10. LIST OF FIGURES ........................................................................................................ 133
11. ABBREVIATION LIST ................................................................................................... 137
12. ANNEX 1: CALCULATION OF COMPULSORY STOCKS OF OIL AND PETROLEUM
PRODUCTS FOR THE PERIOD BY THE YEAR 2020 ACCORDING TO EU
LEGISLATION (ACCORDING TO SCENARIO S1-LOW GROWTH) ............................... 139
13. ANNEX 2: CALCULATION OF COMPULSORY STOCKS OF OIL AND PETROLEUM
PRODUCTS FOR THE PERIOD BY THE YEAR 2020 ACCORDING TO EU
LEGISLATION (ACCORDING TO SCENARIO S3-SUSTAINABLE) ................................ 147
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1. INTRODUCTION

1
Oil is one the basic energy products in the world, with constantly growing consumption.
Lately, the world is increasingly faced with difficulties of securing energy for the future,
especially where oil as a non-renewable energy resource is concerned. The importance of oil
as an energy resource is analyzed globally more and more, and alternative energy sources
are being explored. The main reasons are the limited quantities of oil, its uneven distribution,
ecological problems related to consumption of oil as an energy product and its high and ever
rising price.
This makes the oil industry a strategic component of the energy system of any country, and
countries must have a strategy for its development. One of the characteristics of today’s oil
sector is a growing consumption trend, especially in the developing countries where the
annual growth rate is 2.5% on average. The developed countries also see their consumption
increasing but at slower rates due to their efforts in using rationalization and technological
improvements. The oil market is still very sensitive to global political developments, with a
consequence that with any new crisis in the world, the crude oil prices soar. This stresses the
need for each country to develop its own energy policy and energy strategy with a vision of
long-term development.
Thus, the topic of this module is an in-depth analysis of the Bosnia and Herzegovina’s oil
sector, in particular in light of its significant dependence on imported oil and petroleum
products. A detailed analysis is carried out for the purpose of projections of petroleum
product consumption growth in the period until 2020, with the aim to eliminate the discovered
weaknesses in the present system of operation in the sector.
The existing oil processing plants and their forthcoming privatization with the view to restore
the BIH oil industry is a potential factor of economic growth of the entire country. In addition,
better utilization of refining capacities would eliminate or partially reduce the dependence on
imported petroleum products. The most important development factor in this industry
appears to be the endeavor to reach the effective EU petroleum products quality standards in
as short period of time as possible.
Today, special attention in the world is given to exploring new oil deposits because of
diminishing oil reserves. Perspective new oil deposits in several areas of Bosnia and
Herzegovina represent a considerable potential for the oil sector development.
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2. OVERVIEW OF THE OIL SECTOR

3
Bosnia and Herzegovina is fully dependent on imported oil but it has production, or refining
capacities, in two refinery plants, and considerable storage capacities of oil and petroleum
products. It also has an increasingly developed transport network with a large number of
service stations. Moreover, favorable results obtained in oil and gas prospecting in Bosnia
and Herzegovina and the existing infrastructure opens the possibility for development of such
economic activity. The current situation in the oil industry, starting from stagnation in the
Bosanski Brod Oil Refinery as a key factor of the country's oil industry, raises concerns and
does not guarantee security or stability of supply of this strategic product. However, favorable
developments in the privatization process point at progress when looking at the general
situation of the oil sector. The available production and refining capacities of both refinery
plants, Bosanski Brod Oil Refinery and Modriča Lube Refinery, are relatively high.
2.1. Bosanski Brod Oil Refinery

The Oil Refinery has gone through different phases and the prevalent driving factor for its
growth was the development of car production and chemical industry, and the demand for
specific petroleum products these industries had created. The Refinery's capacities were
designed to meet the needs of these industries, both technologically and in terms of
refinement operation volumes.
The refining capacities are not only sufficient to fully meet the needs of Bosnia and
Herzegovina, but they largely exceed these needs. Namely, refinery plants are divided in two
technological lines with the capacity of processing 4,320,000 tons of oil annually.
2.1.1. Configuration of old line and production potentials
The old line started operation in 1968 when it had a capacity of 2 million tons a year, but
currently its effective processing capacities measure at 1,320,000 tons a year.
Production is based on Snam Progetti technology, and the plant can be divided into 9
technological units.
Unit 01 – Atmospheric and vacuum distillation unit

Unit 01 dates from 1950 and has the capacity of 1,800 tons per day. Peak fractions are fed
into the stabilizer and splitter in Unit 02. Heavy currents are light gas oil for mixing diesel,
hydrocracking feed, and light and heavy fuel oil.
Unit 02 – Atmospheric distillation unit

The crude oil distillation section has the capacity of 4000 tons/day with peak fractions fed into
the stabilizer and splitter, and feed lines for mixing gasoline and diesel. The bottom end of
the atmospheric column is connected with a vacuum distillation unit. The sections of the
stabilizer and splitter separate peak fractions of crude oil in petroleum gas, LPG, naphtha
and heavy oil.
Unit 03 – Vacuum distillation unit

In this unit additional fractions are produced from residuals deriving from an atmospheric
distillation unit. These fractions are used for mixing fuel oil and vacuum gas oil for
hydrocracking feed.
Unit 04 – Gasoline platforming unit

Heavy oil from the atmospheric distillation unit is hydrotreated in order to separate sulfur and
then reformed in the reactor by use of a Pt- catalyst. This process results in hydrogen-rich
liquid, of which the bottom end of the column is used for obtaining hydrogen used for sulfur
separation. At exit, petrol gas, LPG and a component for mixing gasoline, are obtained.
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Catalytic regeneration often depends on the intensity of the reforming process, which
determines the octane level, thus with higher reforming process intensity, it becomes shorter.
Unit 05 – Catalytic hydrocracking unit (ISOMAX)
In this unit catalytic vacuum gas oil cracking takes place and is critical for the operation’s
cost-efficiency both in the Bosanski Brod Oil Refinery and Modriča Lube Refinery. The unit
produces not only LPG, low-aromatic gasoline and diesel components, but also high-value oil
distillates, which are further treated in the Modriča Lube Refinery to give a wide assortment
of oils and lubricants.
Unit 06 – Hydrogen production unit (Lummus)

Since the reformer does not produce sufficient hydrogen for hydrocracking, ''lighter'' column
ends of Unit 04 are used for reforming steam. Hydrogen obtained from this process is
compressed at high pressures needed for hydrocracking.
Unit 07 – LPG Recovery unit

Gas flows from Units 02 and 05 are divided in to oil gas for the refinery's own use and LPG
(propane and butane).
Unit 08 – Gasoline Merox unit

In gasoline flows from Units 02 and 05, sulfur is extracted by the Merox process. The
obtained low sulfur product is used for mixing gasoline.
Unit 09 – LPG Merox unit

Similarly, the sulfur is extracted from LPG by the Merox process before storing.
At present the old line is fully operational (with the capacity of 1,320,000 tons/year) but
because of lack of financial resources the production is not continual and capacity utilization
is very low. The hydrocracking and hydrogen production plant are also set for operation but
because of the production interruptions, the hydrocracking operation is nitrogen-pressurized
while the catalyst in containers is ready for filling up. A catalyst's lifetime is estimated to be 1-
2 years, so the refinery is planning to replace the existing catalyst by a Shell make catalyst
which would enable the reduction of the share of polycyclic aromatics to 2% and thus
improve the quality of basic oil derivatives. The old line is designed for operation with Kirkuk
type crude oil, but it performed well with various types of Russian, Middle-Eastern and
African oil as well.
Table 2.1 Yields of the old line with and without hydrocracking (based on 330 days operation)
With hydrocracking Without hydrocracking
tons/year % tons/year %
Input
Kirkuk crude oil 1,320,000 1,320,000
Output
LPG 4,488 0.34 15,972 1.21
Light Gasoline 20,592 1.56 20,064 1.52
Leaded Motor Gasoline (MB-98) 194,436 14.73 162,360 12.30
Leaded Motor Gasoline (MB-86) 13,728 1.04 12,144 0.92
Wite Spirit 1,452 0.11 13,200 1.00
Kerosene type jet fuel 17,424 1.32
484,440 36.70
Diesel 491,304 37.22
Fuel oil 280,236 21.23 390,720 29.60
Bitumen 83,556 6.33 66,000 5.00
Base oil derivate for Modriča 66,000 5.00 -
Refinery losses 146,784 11.12 155,100 11.75
Total 1,320,000 100.00 1,164,900 100.00
Source: Bosanski Brod Oil Refinery

5
2.1.2. Configuration of new line and production potentials
The capacity of the Refinery’s new oil line was designed for the annual output of 3 million
tons. It was planned to close down the old line except for hydrocracking and hydrogen
production operations. Minimum production capacity is estimated to 5,500 tons a day. The
construction of the new oil refining line was completed and put in trial operation in 1991, but
because of the war, the effective operation of the line never started. War caused damage
and lack of financial resources after it prevented the start off of the new line’s operation.
Refinery’s auxiliary installations produce and distribute steam, electricity, and supporting
media for the Refinery's own use, and their size is set up in a way that they supply steam for
other industrial users as well, and are used for heating the business and residential premises
in Bosanski Brod. The new production line consists of the following units:
Unit 31 – Atmospheric and vacuum distillation unit (9.100 tons/day)

Peak fractions obtained from crude oil distillation include oil and lighter components.
Kerosene, light petrol gas and heavy petrol gas are produced as by-flows, and atmospheric
residual from the bottom end of the column is further processed in the vacuum distiller.
Unit 32 – HDS (Hydrodesulphurization), stabilization and splitter of peak gasoline (2,275

tons/day)
Peak fraction flow from unit 32 and oil from unit 05 are hydrotreated in order to eliminate
sulfur (Hydrodesulphurization). The product with low sulfur content is then separated into
petrol gas, LPG and light and heavy oil.
Unit 33 – CCR, gasoline reforming with continuing catalyst regeneration unit (1,580 tons/day)
Hydrotreated heavy oil from Unit 31 is reformed in the CCR process by the same procedure
as in the old reforming plant. The difference is that CCR contains a regenerator so that the
catalyst streams from the reactor to the regenerator, where carbon is burned, and the
catalyst is regenerated. It is also possible to eliminate the exhausted catalyst, without too
long a pause in the operation, and to replace it with a fresh one. The main advantage of CCR
is that it avoids pauses in the operation on account of regeneration, which enables a longer
uninterrupted operation. Uninterrupted operation for more than three years is not unusual for
this plant design. The CCR product is stabilized and petrol gas, LPG and high-octane
reformat for gasoline mixing are obtained from it. The hydrogen surplus from this process is
compressed and sent to three hydrotreating units: 32, 34 and 35.
Unit 34 – Kerosene HDS unit (Hydrodesulphurization) (307 tons/day)

A portion of kerosene from Unit 31 is hydrotreated in order to produce low-sulfur kerosene,
for sale, including jet fuel. Sulfur is eliminated in the catalytic process with the presence of
hydrogen combined with hydrogen sulfide (H2S).
Unit 35 – Gas oil HDS unit (Hydrodesulphurization) (1,474 tons/day)

Heavy gas oil and distillate from Unit 31 are hydrotreated in order to obtain products with low
sulfur content for diesel mixing.
Unit 36 – Amine scrubbing of dry gas unit (76 tons/day)

Hydrogen-sulfide rich gases from Units 05, 32, 34, and 35 are removed by the use of
diethanol amine (DEA) which absorbs H2S. The used DEA, together with products from the
hydrogen sulfide scrubbing unit is regenerated in Unit 36. The products of this Unit are
''sweetened'' petrol gas and hydrogen sulfide rich acid gas.
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Unit 37 – Amine scrubbing of liquefied petrol gases (183 tons/day)
LPG from Unit 32 is ''sweetened'' by DEA scrubbing. The used material is regenerated in
Unit 36.
Unit 38 –Sulfur recovery unit (84 tons/day)

In this unit acid gas is combusted at high temperatures, and sulfur is recovered as liquid.
This unit also includes a ''Sandvik'' unit for the generation of solid sulfur. The remaining gas
from this unit still contains some unconverted H2S which is additionally treated in Unit 39.
Unit 39 – Treatment of residual acid gases unit (60 tons/day)

In order to achieve 99-percent removal of sulfur from residual gases, they are subsequently
burned. Waste gas is discharged in the atmosphere through a chimney as fumes.
Unit 41 – Propane deasphaltisation of vacuum residual unit (625 tons/day)

A part of residuals from slops with vacuum distillation is separated in to light and heavy
fractions by extracting lighter material by the use of propane. The products of this process
are deasphalted oil distillate and mixing asphalt. The oil distillate stream is then processed in
the hydrocracking units.
Unit 42 – Bitumen blowing unit (350 tons/day)

This Unit processes the mixture of vacuum distillate, slops and rich vacuum gas oil,
depending on the required bitumen class. Bitumen is obtained by blowing with oxygen for the
production of a variety of materials for mixing and is used in road construction and industry.
This Unit also produces condensate which is mixed as fuel oil.
Unit 05 – Hydrocracking (1 076 tons/day)

This Unit processes rich vacuum gas oil and deasphalted oil derivative for the production of
light gasoline components with low sulfur content and high-value hydrocracking oil
derivatives for the Modriča Oil Refinery.
Unit 06 – Hydrogen production (35 tons/day)

This Unit uses the steam reforming process for the production of 99-percent hydrogen from
petrol gas in combination with the steam of hydrogen-rich gas from CCR.
Since this line is not yet fully operational (trial operation has only just been carried out), the
output potentials must be assessed from the project task data. Due to this, the calculations of
yields of specific products in Table 2.2 are based on processing of Kirkuk type crude oil with
an output of 9,100 tons a day for 330 days per year.
Before 1991 the Refinery processed between 1.6 and 2 million tons of crude oil per year,
depending on the quantities of oil it received in the distribution scheme of the Yugoslav crude
oil imports and on market requirements. The oil was transported mainly by tankers to Omišalj
on Krk island and then by Yugoslav Pipeline System up to the Refinery. Certain quantities of
crude oil were shipped via port Ploče by railway and some quantities by the Sava River.
Delivery of products from the Refinery was carried out by road, railway, product pipeline
Bosanski Brod – Opatovac on the Danube (near Vukovar) and by the Sava River.
The problems in the Refinery’s operation began when, in October 1991, the production was
closed because the transport of crude oil by the JANAF pipeline system ceased. At that time
the Refinery claimed considerable funds from the Federal Equalization Fund (about 85
million USD), which recovered the difference between the crude oil price and the price of
final products.

7
Table 2.2 New line’s yields based on 330 days per year
Yields Share
t/year %
Input
Kirkuk crude oil 3,003,000
MTBE 74,200
Total 3,077,200
Output
LPG 27,922 0.9
Leaded Motor Gasoline (MB-98) 75,420 2.5
Diesel oil (0,5% S) 183,114 6.0
Diesel oil (1,0% S) 732,328 23.8
IGO (1,0% S) 200,000 6.5
Base oil derivate for Modriča 122,002 4.0
Heavy fuel oil 328,419 10.6
Light fuel oil 16,448 0.5
Industrial bitumen 40,000 1.3
Bitumen 349,999 11.4
Sulfur 27,720 0.9
Refinery losses 195,201 6.3
Total 3,077,200 100.00
Source: Oil Refinery Bosanski Brod
During the war, the plant and installations suffered serious damage. Heavy damage was
inflicted on the sections of processing, auxiliary and energy installations and establishments.
The old refining line was reconstructed while the new line is still waiting for the rebuilding of
damaged parts of the installations. One part of the reservoir space was also damaged and it
should be reconstructed before the start-up of the new line. The power network, oil pipeline
and product pipeline, and port installations on the Sava River were all damaged. The bridge
over the Sava River connecting the Refinery with the railway line was demolished. The
damage on fixed and current assets is estimated to 110 million USD. Before 1991, the
Refinery placed the average of 75-80 percent of its petroleum products output on the BIH
market, and the remainder went to the markets of Slovenia, Serbia and Croatia. Significant
quantities of the Refinery's products, such as bitumen and LPG, were exported to Austria
and Italy. Bosnia and Herzegovina accounted for 13 percent of total Yugoslav petroleum
product consumption, or 16 million tons. Total reservoir volume in the Bosanski Brod Oil
Refinery amounted to 473 291 cubic meters (Table 2.3).
Table 2.3 Total reservoir volume in the Bosanski Brod Oil Refinery
3
m Volume
Crude oil 79,231
Gasoline and Kerosene type jet fuel 134,265
Diesel, Eurodiesel 81,081
Total „white“ products 215,346
Fuel oil 164,183
Bitumen 11,406
Total „black“ products 175,589
LPG 3,125
Total 473,291
Source: Bosanski Brod Oil Refinery
Final Report
8
Revitalization and sanation of the Refinery was carried out in phases which were conditioned
by the level of damage, financial resources and the lack of workers qualified for the needed
overhaul works. The gradual sanation created conditions to begin the crude oil processing,
and with completion of each phase of overhaul and revitalization works, the range of product
mix was wider. Around 20 million Euros had been invested in the Refinery's revitalization
before the crude oil processing could begin. In mid-1997 the Refinery started to set in
operation the plants for primary processing, and in 1998 the conditions were in place to
produce the same product mix the Refinery had produced before the war. As a whole, the
restarting of the Refinery's production was not without difficulties, which were evident
primarily in the lack of regulation in relations at the petroleum products market, and the tax
system of Bosnia and Herzegovina, which for a long period of time lacked uniformity. The
difficulties were also evident in the lack of financial resources which would enable the
production of petroleum products by the European standards as well as inadequate
capacities of the banking system to support crude oil import, the lack of expert workforce
especially in technological fields, slow privatization processes, etc.
After 2000 the Refinery's output suffered a considerable setback (Table 2.4). Due to the lack
of current assets for purchase of crude oil, the industry, in the whole post-war period,
operated in very difficult conditions. As a consequence, the production capacities utilization
level was minimal. Although the plants and installations were partly repaired from damages
and quantitative output was restored to the pre-war levels, only 5 to 20 percent of the
capacities were effectively used (Figure 2.1).
Table 2.4 Oil processing in the Bosanski Brod Oil Refinery in the period 2000 - 2005
tons 2000 2001 2002 2003 2004 2005*
Gross refinery intake 518,521 253,519 233,033 69,933 172,128 135,349
Planned refinery intake 1,200,000 1,000,000 800,000 800,000 900,000 420,000
Realization of plan (%) 43 25 29 9 19 32
Capacities in function 2,000,000 2,000,000 2,000,000 2,000,000 1,320,000 1,320,000
Capacity utilization (%) 26 13 12 3 13 10
Number of employees 1,455 1,448 1,453 1,429 1,457 1,448
Production per employee 356 175 160 49 118 93
Source: Foreign Trade Chamber of Bosnia and Herzegovina, * Bosanski Brod Oil Refinery
2000
1800 Capacities in function
1600 Gross refinery intake
1400
x 1 000 tons
1200
1000
800
600
400
200
0
2000 2001 2002 2003 2004 2005
Figure 2.1 Output in Bosanski Brod Oil Refinery in the period 2000 – 2005
Source: Foreign Trade Chamber of Bosnia and Herzegovina

9
In 2005 petroleum products were sold mainly at the Bosnia and Herzegovina market, while
only small quantities were exported (Table 2.5, Figure 2.2).
Table 2.5 Output and sale of products by markets in 2005

Refinery
tons RS F BIH Export %
output
Motor gasoline 16,800 1,300 0 18,100 13.67
Diesel oil 29,800 1,600 0 31,400 23.72
Kerosene type jet fuel 0 0 0 0 0
Light fuel oil 5,376 3,600 24 9,000 6.80
Fuel oil 62,400 2,300 0 64,700 48.86
LPG 1,600 200 0 1,800 1.36
Bitumen 5,476 1,900 24 7,400 5.59
Total 121,452 10,900 48 132,400 100.00
140000
120000
100000
80000
tons
60000
40000
20000
0
RS FBIH Export
Figure 2.2 Total sales in 2005 by markets

All this critically affected the consolidation of the Refinery and its market positioning. Its
market position, as a basis for consolidation, was challenged primarily by the competition in
the Region, total liberalization of imports without any mechanism that would protect the
domestic production, and the fact that before January 1st, 2005 in BIH incompatible taxation
systems came into force, which all lead to significant decrease in exports and diversification
of sales in the period between 2000 and 2005 (Table 2.6, Figure 2.3).
Table 2.6 Product sales by markets in the period 2000 - 2005
2000 2001 2002 2003 2004 2005
Market
t % t % t % t % t % t %
RS 271,810 61.60 172,982 70.30 94,225 58.20 48,969 60.20 71,687 96.66 121,452 91.73
F BIH 65,765 14.90 11,442 4.70 17,561 10.80 1,451 1.70 1,970 2.66 10,900 8.23
Export 103,470 23.50 61,366 25.00 50,229 31.00 30,965 38.10 508 0.68 48 0.04
Total 441,045 100.00 245,790 100.00 162,015 100.00 81,385 100.00 74,165 100.00 132,400 100.00
Final Report
10
300000 RS FBIH Export
250000
200000
tons
150000
100000
50000
0
2000 2001 2002 2003 2004 2005
Figure 2.3 Product sales by markets in the period 2000 – 2005

The Refinery's operation was also faced with significant market changes, as the period after
1977 saw a rising demand for more environmentally friendly petroleum products, especially
low-sulfur diesel, 1-percent sulfur fuel oil and in general for the products with improved
qualities, like lower sulfur, lead, and aromatics content in petroleum products for final use as
well as the increase in diesel cetane number. The European norms and standards were
introduced in the oil business, which in addition to ecological concerns also address the
technical obstacles to free trade. Such rapid oil market changes put the Refinery in a position
that required not only recovery but also the streamlining of its technological process and
adjusting its production to these changes. All this required additional funds the Refinery was
not able not provide.
After several months talk with the NefteGazInKor Company, a part of the Russian national
group Zarubezhneft in Moscow, an agreement was signed on May 22nd, 2007 on selling the
majority,state-owned shares in the Bosanski Brod Oil Refinery, Modriča Lube Refinery and
the Petrol Banja Luka Company. The investments in reconstruction and recovery of the new
oil processing line would enable the enhancement of production capacities and increased
quality of final products. Also, the Decision on amending the Decision on the quality of liquid
oil fuels (Official Gazette BIH 19/07) would allow the selling and production of gasoline and
diesel fuel that are not in compliance with the European standards for a certain period of
time, which would leave the Refinery with a certain transitional period for reaching the
required quality of products. By purchasing 80% share in the Bosanski Brod Refinery, 75.6%
share in the Modriča Refinery and 80% share in Petrol Banja Luka, the Russian company
NefteGazInKor was obliged to invest until 2010 in the projects that would lead to the
revitalization of the entire oil industry of BIH (Table 2.7). Modernization, both in terms of
product quality and in terms of addressing environmental concerns, is the critical factor for
the existence of the Bosanski Brod Refinery.
Table 2.7 Planned investments in the Bosanski Brod Refinery, Modriča Refinery and Petrol
Banja Luka
Planned projects Investment value Investment period
Modernization of Bosanski Brod Refinery 153,000,000 EUR 2007 – 2010
Construction of the railway line Bosanski Brod-Modriča 59,000,000 EUR 2007 – 2010
Modernization of distribution network Petrol Banja Luka 32,000,000 EUR 2007 – 2010
Modernization of Modriča Refinery 35,200,000 EUR 2007 – 2010
Total 279,200,000 EUR 2007 – 2010
Source: Bosanski Brod Oil Refinery, Modriča Lube Refinery

11
The investments would ensure the functioning of the processing capacities of the new line
which would increase the total Refinery's annual capacity up to 4.2 million tons. The works
have just begun in the Bosanski Brod Refinery to prepare the plant's overhaul, equipment
maintenance, preparations for the cleaning of crude tanks, and spare parts needed for
overhaul works have been ordered since the Refinery's bank account was released after a
long period of freeze.
2.2. Modriča Lube Refinery

The Modriča Lube Refinery has been operating for 53 years. It was established in 1954 and
its intensive development started in 1960 with the merging the Refinery with the Bosanski
Brod Oil Refinery. This was the beginning of the first phase of the production program and in
1964 the first motor oil of the brand names Optima and Maksima were produced. These were
the brands that made Modriča Oil Refinery well known at the then single Yugoslav
marketplace, and in a wider region.
Significant development was achieved in 1980 with the construction and start of the plant
producing base oils and paraffin. This production was a part of the integral technological and
economic setup shared with the Bosanski Brod Oil Refinery. The investments created
conditions for production increase and successful performance of the Modriča Lube Refinery.
The production reached around 50,000 tons of lubricants and around 70,000 tons of oil base
stock.
The production program basically consisted of motor oils, industrial and special-purpose oils,
grease, base oils, transformer insulating oils, and paraffin. Overall production was sold at the
Yugoslav and foreign markets. About 30 percent of produced base oils and paraffin was
placed at the western European market and the Refinery had long term contracts with
renowned West European companies. Distinguishable quality of products and performance
enabled the Modriča Lube Refinery to produce and pack the oils of the world-known brand
Castrol, complying with very strict standards.
The beginning of the war in 1992 terminated a dynamic and intensive growth of the Modriča
Lube Refinery and during the war its technological installations and other material assets
suffered very serious damage. The damage was estimated at around 45 million KM (around
30 million USD). Despite all these problems, the Refinery managed to maintain the continuity
of production and slowly regains its markets, due primarily to the Company's maintaining the
stable quality of its final products.
Of the total Refinery’s production capacities, only lubricant production capacities are
functioning, while the base oils production capacities are not operational. The reason is the
connection between the base oils production with the ISOMAX plant operation of the
Bosanski Brod Oil Refinery, which is not working. The other reason is the high price of
imported raw material for this technological line due to high transportation costs. The idle
condition of base oil production line is the reason for the low level of the Refinery's capacity
utilization and low business performance. It should be noted that the Modriča Lube Refinery
still operates with a financial profit, despite all the difficulties, especially in terms of production
capacity, the oil sector is Bosnia and Herzegovina is facing..
In recent years, the Modriča Lube Refinery has undertaken many efforts in order to solve one
of its biggest problems: consolidation of its position at the traditional markets of lubricants in
the South-East European countries, because presently it sells only in Bosnia and
Herzegovina, Serbia, and Montenegro (Table 2.8). Basic activities are focused on increasing
the market share by developing strategies which include the highest product quality and
modern customer relations. In this period the production program has been enlarged with
some new types of high quality motor oils, meeting the requirements of the motor and vehicle
producers. The quality of gearbox and differential oils has been improved, as well as that of
engine coolants with extended usability time, i.e., replacement intervals. The Refinery also
makes efforts to meet demands for industrial oils, quality of which is adjusted to today's
Final Report
12
technological and environmental requirements. The continuity in production quality is
confirmed by the fact that the Modriča Lube Refinery won a number of prizes for the quality
of its products, among which the European Quality Award in 2001, received in Frankfurt and
the New Millennium Award in 2001, received in Paris, stand out.
Table 2.8 Sales by markets in the period 2000 - 2005
2000 2001 2002 2003 2004 2005
Market
t % t % t % t % t % t %
RS 6,460 52 7,511 64 9,076 72 7,228 65 6,188 51.4 5,588 50
F BIH 252 2 267 2 843 7 844 7.5 915 7.6 1,000 9
Serbia / Montenegro 5,396 43 3,956 33 2,597 20 3,044 27 4,790 39.8 4,377 41
Other markets 395 3 112 1 110 1 63 0.5 155 1.2 135 1
Total 12,507 100 11,864 100 12,626 100 11,179 100 12,048 100 11,100 100
The Refinery's modern and well-equipped specialized laboratory is accredited with the
international standard ISO 17025 and is capable of conducting any testing procedure by use
of more than 100 standard methods. The Refinery has the standard ISO 9001:2000.
With the impending privatization of both refineries in prospect, which will result in the start-up
of the base oil line connected with the ISOMAX plant in the Bosanski Brod Oil Refinery it is
expected to dramatically increase the Refinery’s capacity utilization level. Market
consolidation would enable the increase of production volume of the current range of
products (Table 2.9, Figure 2.4) as well as introducing new products in the Refinery's product
mix. This will boost the financial performance of the Company.
The investments of the Russian NefteGazInKor in the Modriča Refinery (Table 2.7) should
put in function all its production capacities. This plan is based on starting the oil processing
operation in the Bosanski Brod Refinery and on the construction of the railway line Bosanski
Brod – Modriča, which would provide low cost raw material for basic oil production and
reduce the transportation costs.
13500
13000
12500
12000
tons
11500
11000
10500
10000
2000 2001 2002 2003 2004 2005
Figure 2.4 Total production of Modriča Lube Refinery in the period 2000 - 2005
Source: Modriča Lube Refinery
Table 2.9 Output in the period 2000 - 2005
tons 2000 2001 2002 2003 2004 2005
Motor oil 7,550 6,843 8,079 6,734 7,251 6,130
Industrial oil 1,867 1,806 1,716 1,331 1,473 1,382
Greases 280 197 244 193 248 264
Refrigeration liquid 1,112 709 1,088 1,042 1,347 1,371
Other 1,935 1,730 2,019 1,965 1,840 1,953
Total 12,744 11,285 13,146 11,265 12,159 11,100
Source: Modriča Lube Refinery

13
2.3. Petrol products market in Bosnia and Herzegovina

In the pre-war period the needs of Bosnia and Herzegovina for petroleum products were
between 1.5 and 1.7 million tons a year. For example, in 1990 at the Bosnia and
Herzegovina's market, a total of 1.68 million tons of petroleum products were sold. The major
suppliers or distributors were Energopetrol Sarajevo and INA Zagreb. Energopetrol covered
70-75% of the market, while INA covered 25-30%.
When the new line of the Bosanski Brod Oil Refinery with capacity of 3 million tons a year
was designed and constructed, it was considered that the annual needs of Bosnia and
Herzegovina for petroleum products would amount to 2.3 million tons. According to available
data referring to the period between 2000 and 2005, the consumption of petroleum products
in Bosnia and Herzegovina increased from 800,000 to 1.3 million tons a year.
2.3.1. Import and export of petroleum products
Today Bosnia and Herzegovina largely depends on imported petroleum products making its
market highly sensitive to all difficulties in supply. In recent years, with a production drop in
the Bosanski Brod Oil Refinery and a rising demand for petroleum products, the import in
BIH is constantly rising (Tables 2.10 to 2.15, Figures 2.5 to 2.8).
1200 Import of oil derivates Export of oil derivates
1000
800
x 1 000 t
600
400
200
0
2000 2001 2002 2003 2004 2005
Figure 2.5 B&IH import and export of petroleum products in the period 2000 - 2005
Source: Foreign Trade Chamber of Bosnia and Herzegovina, Ministry of Energy, Mining and Industry
(FBIH), Ministry of Economy, Energy and Development (RS)
Table 2.10 BIH import and export of petroleum products in the period 2000 - 2005
x 1,000 t Import Export
2000 810.7 109.3
2001 956.5 65.4
2002 931.2 52.9
2003 987.0 34.1
2004 1,033.3 5.5
2005 1,012.5 4.5
Total 5,731.2 271.7
Final Report
14
Data show that in 2005 a total of 1,012,500 tons of all kinds of petroleum products was
imported in Bosnia and Herzegovina, as well as 146,500 tons of crude oil, which total to
1,159,000 tons. A detailed overview of the import structure by petroleum products is given in
Table 2.11. Petroleum products are mostly imported from Croatia, Serbia and Montenegro,
Hungary, Slovenia and Austria (Table 2.12).
Table 2.11 Import of oil and petrol products in BIH in 2005
Import 2005.
Type of oil derivate
Quantity (t) % m/m
Motor gasoline 245,700 24.27
Diesel 477,500 47.16
Light fuel oil 98,500 9.73
Fuel oil 75,600 7.47
Lube oil and greases 11,000 1.09
LPG 28,500 2.81
Bitumen 69,300 6.84
Other 1,100 0.11
Total 1,012,500 100.00
Table 2.12 Structure of petroleum product imports in BIH by countries of origin in 2005
% Share
Croatia 49.98
Serbia and Montenegro 15.21
Hungary 14.19
Slovenia 8.95
Austria 6.63
Italy 0.81
Romania 0.78
Bulgaria 0.48
Germany 0.26
Other countries 2.70
Total 100.00
Source: Council of Competition BIH
In 2005 a total of 4,560 tons of petroleum products was exported from Bosnia and
Herzegovina, 99 percent of which were exported from the Modriča Lube Refinery, and only 1
percent from the Bosanski Brod Oil Refinery (Table 2.5 and 2.6).
Table 2.13 Import of petroleum products in the period 2000 - 2005 in FBIH
x 1,000 t Quantity
2000 625.5
2001 715.6
2002 654.7
2003 608.0
2004 647.4
2005 636.2
Total 3,887.4

15
720
700
680
x 1 000 t 660
640
620
600
580
560
540
2000 2001 2002 2003 2004 2005
Figure 2.6 Import of petroleum products in the period 2000 - 2005 in FBIH
Table 2.14 Import and export of crude oil and petrol products in the period 2000 - 2005 in the
Republic of Srpska
x 1,000 t Oil derivate Row material Export
import import
2000 163.2 531.4 109.3
2001 219.4 264.9 65.4
2002 256.7 246.3 52.9
2003 359.3 81.3 34.1
2004 364.7 184.4 5.5
2005 355.3 146.5 4.5
Total 1,718.6 1,454.8 271.7
600
Oil derivate import Crude oil import Oil derivate export
500
400
x 1 000 t
300
200
100
0
2000 2001 2002 2003 2004 2005
Figure 2.7 Import and export of petrol products in the period 2000 - 2005 of the Republic of
Srpska
Final Report
16
Table 2.15 Import of petrol products in the period 2000 - 2005 in the Brčko District
x 1,000 t Quantity
2000 22.0
2001 21.5
2002 19.8
2003 19.7
2004 21.2
2005 21.0
Total 125.2
22
21
x 1 000 t
20
19
18
2000 2001 2002 2003 2004 2005
Figure 2.8 Import of petrol products in the period 2000 – 2005 in the Brčko District
2.3.2. Overview of petroleum product consumption in Bosnia and

Herzegovina
The petroleum product consumption in BIH is determined for each entity separately on the
basis of imported quantities of petroleum products (Tables 2.11, 2.13, 2.14 and 2.15) and
refineries' sales. The structure of consumers of specific types of petroleum products was
determined on the basis of a survey which covered 4,000 households.
Table 2.16 Petrol product consumption in BIH in 2005
Production
Stock
tons Import
Export Bos. Brod Modriča Coke oven Consumption
change
Ref. Ref. plant
Motor gasoline 245,700 0 18,100 0 0 - 1,300 269,800
Diesel oil 477,500 0 31,400 0 0 - 1,600 513,400
Kerosene type jet fuel 5,300 0 0 0 0 0 5,300
Light fuel oil 98,500 24 9,000 0 0 - 3,600 110,476
Fuel oil 75,600 0 64,700 0 0 - 23,000 118,800
Lube oil and greases 11,000 4,512 0 12,100 0 - 1,000 17,088
LPG 28,500 0 1,800 0 0 - 200 28,700
Bitumen 69,300 24 7,400 0 0 - 1,900 76,676
Other 1,100 0 0 0 19,300 0 20,400
Total BIH 1,012,500 4,560 132,400 12,100 19,300 - 11,900 1,160,640

17
Also, a survey about industry and service sectors was carried out which included 600
companies. In the future, the survey will be extended to include the BIH industry. The survey
included both entities and the Brčko District where the entire Republic of Bosnia and
Herzegovina was divided into 11 zones. Each zone was observed through urban and rural
areas. Table 2.16 gives the import of petroleum products, refineries' sales on the domestic
market and overall consumption. The consumption of petroleum products in Bosnia and
Herzegovina as shown in Table 2.16 was determined on the basis of total import of
petroleum products in Bosnia and Herzegovina and the domestic sales of the Bosanski Brod
Oil Refinery and the Modriča Lube Refinery. The data on consumption and import in the
Federation BIH were received from the Federal Ministry of Energy, Mining and Industry and
they were the basis for determining the consumption in F BIH. For the energy balance of
petroleum products in RS, the data from the Foreign Trade Chamber of BIH, Ministry of
Economy, Energy and Development of RS as well as the Refinery's own data were all used.
The survey's results and relevant estimates gave way to determine that petroleum product
consumption in the Brčko District makes up about 3% of total petroleum product
consumption in BIH, or around 37,280 tons.
Since transport is the most significant sector in the consumption structure, the table below
gives a more detailed overview of the consumption of specific types of petroleum products in
this sector (privately-owned passenger vehicles) by zones. Data are determined on the basis
of the survey and do not include petroleum product consumption by service cars, taxi service
vehicles, etc.
Table 2.17 Overview of petroleum product consumption by privately-owned passenger vehicles
BMB MB Diesel LPG
tons / year consumption consumption consumption consumption
Total
Zone 1 Una-Sana 12,948.3 5,729.4 31,077.1 0.0 49,754,9

Tuzla, Zenica-Doboj, Bosnian
Zone 2 53,948.8 12,504.0 102,730.0 428.5 169,611,4
Podrinje, Sarajevo
Zone 3 Sarajevo 21,549.9 1,197.2 22,277.2 418.7 45,443,1
Zone 4 Central Bosnia, Herzegovina-Neretva 6,069.6 181.4 11,978.0 0.0 18,229,1
Posavina, Central Bosnia,
Zone 5 16,662.0 351.7 16,076.0 1,832.0 34,921,9
Herzegovina-Neretva
Zone 6 Herzegovina-Neretva 10,071.8 930.1 17,194.1 758.4 28,954,5
Zone 7 West Bosnia, West Herzegovina 6,104.7 1,555.3 10,247.1 0.0 17,907,1
Zone 8 Banjaluka - Doboj 66,571.6 33,100.8 94,168.8 116.3 193,957,7
Zone 9 Bijeljina - Pale 5,207.9 4,359.7 12,731.6 398.3 22,697,7
Zone 10 Trebinje 6,669.6 2,639.1 9,402.3 152.8 18,863,9
Zone 11 Brčko District 2,009.0 0.0 4,990.0 0.0 6,999,0
Total 207,813.6 62,549.1 332,872.7 4,105.2 607,340.7
Source: Households survey BIH
The data in Table 2.17 show that the consumption of motor gasoline and diesel is identical to
the consumption calculated as a sum import plus sales from the Bosanski Brod Refinery.
Namely, the consumption of unleaded motor gasoline (BMB) and leaded motor gasoline
(MB) determined from the survey is 11.5% below the total consumption. The difference is the
amount of motor gasoline consumption for service cars, taxi vehicles, not included in the
surveys (following the experience in other countries). The consumption of diesel fuel for
privately-owned passenger cars is 57.9% of total diesel consumption. The remainder of
diesel fuel is consumed in passenger and freight transport, industry and company service
cars, taxi vehicles, etc. A significant indicator is a relatively high share of diesel-run cars of
55.6%. A share of LPG-run cars is relatively low, and is only 1.2 %. Figure 2.9 shows the
consumption of motor gasoline and diesel fuel per inhabitant annually by specific zones.
Final Report
18
90
106
80
105
120
70 83
104
105
100 60
103
105 102
50
80
101 40
60 100
30
63 99
20 33
40
98 99 120
10
97
20
0
100
96
0
80
80
96
70
60
73 60
62 30
40
50
70
40
20
25
28
60
30 20
63
50
20
0
21
15
47
40
10
73
30 0
9 10
72
5
20
72
72
10 80 0
71
0 70
75
60
71
50
70
70
40
70
30
39
Motor gasoline consumption 20
per inhabitant 10
Diesel fuel consumption per 100

116
inhabitant 90
116
116 116
80
91
115
70
115
60
115
50
40
58 115
115
30
114
115
20
114
10
114
0
Figure 2.9 Consumption of motor gasoline and diesel fuel in transport for each zone separately
Table 2.18 shows the petroleum products consumption in household sector, services and
industry for each zone separately. The consumption was determined on the basis of a survey
and the data obtained were used for determining the total petroleum product mix in BIH.
Figure 2.10 shows total consumption of LPG, heating light oil and fuel oil in the mentioned
consumption sectors for each zone separately.

19
Table 2.18 Petroleum product consumption in household sector, services and industry
Households Services Industry Total

tons Light Light fuel Light fuel Light fuel
LPG fuel oil LPG oil LPG oil Fuel oil LPG oil Fuel oil
Federation BIH
Zone 1 0 0 285 996 1,439 0 63 1,724 996 63
Zone 2 5,070 520 936 3,268 37 2 5,906 6,042 3,791 5,906
Zone 3 9,442 42,314 426 1,489 0 6,507 190 9,869 50,310 190
Zone 4 927 0 257 898 0 0 19 1,185 898 19
Zone 5 452 430 146 509 0 0 3 597 939 3
Zone 6 9 0 150 525 24 3,793 723 183 4,318 723
Zone 7 0 436 146 510 0 0 896 146 945 896
Total FBIH 15,900 43,700 2,346 8,195 1,500 10,302 7,800 19,746 62,197 7,800
Republic of Srpska
Zone 8 3,733 10,760 382 3,374 466 492 48,112 4,581 14,626 48,112
Zone 9 367 16,940 178 1,568 34 4,008 8,489 579 22,517 8,489
Zone 10 0 0 40 357 0 0 1,405 41 357 1,405
Total RS 4,100 27,700 600 5,300 500 4,500 58,006 5,200 37,500 58,006
Brčko District
Zone 11 400 1,400 107 421 99 400 1,400 606 2,221 1,400
Total BD 400 1,400 107 421 99 400 1,400 606 2,221 1,400
Total BIH 20,400 72,800 3,053 13,916 2,099 15,202 67,206 25,552 101,918 67,206
Source: EIHP (survey) 2500
60000
2000 2000
50000
1800
1600
40000
1500
1400
1200 30000
1000
1000
20000
800
500
600
10000
400
7000
0
200
0
0 6000
5000
1000
4000
900
3000
25000
800
700 2000
20000
600
1000
500
0
400 15000
300
200 10000
60000
100
1000
900 0 5000
50000
800
40000 0
700
1400
600
30000
500
1200
400 20000
1000
300
10000
200 800
100
600 0
400
LPG (tons/year) 200
Light fuel oil (tons/year)

5000
Fuel oil (tons/year) 4500 1600
4000
1400
3500
1200
3000
1000
2500
2000 800
1500
600
1000
400
500
0 200
Figure 2.10 Petroleum product consumption in household sector, services and industry for
each zone separately
Source: EIHP (survey)
Final Report
20
2.3.3. Overview of petroleum product consumption in FBIH
Table 2.19 Petroleum product consumption in FBIH in 2005

Sales
Sales Sales Coke Stock
tons Import Bos. Brod Consumption
Modriča Ref. oven plant change
Ref.
Motor Gasoline 166,300 1,300 - - - 167,600
Diesel Oil 329,400 1,600 - - - 331,000
Kerosene type jet fuel 4,500 - - - - 4,500
Light fuel oil 65,200 3,600 - - - 68,800
Fuel oil 8,600 2,300 - - 4,000 14,900
Lube oil and greases 2,700 - 1,000 - - 3,700
LPG 21,900 200 - - - 22,100
Bitumen 37,300 1,900 - - - 39,200
Other 300 - - 19,300 - 19,600
Total 636,200 10,900 1,000 19,300 4,000 671,400
Source: Foreign Trade Chamber of BIH, Ministry of Energy, Mining and Industry (FBIH)
2.3.4. Overview of petroleum product consumption in the RS
Table 2.20 Petroleum product consumption in BIH in 2005

Production Sales in Stock
tons Import Export Consumption
Bos. Brod Ref. Modriča Ref. FBIH change
Motor Gasoline 74,000 0 18,100 0 1,300 6,000 96,800
Diesel Oil 138,600 0 31,400 0 1,600 4,500 172,900
Kerosene type jet fuel 800 0 0 0 0 0 800
Light fuel oil 31,100 24 9,000 0 3,600 3,000 39,476
Fuel oil 65,600 0 64,700 0 2,300 -,25,500 102,500
Lube oil and greases 8,000 4,512 0 11,100 1,000 -,500 13,088
LPG 5,900 0 1,800 0 200 -,1,600 5,900
Bitumen 30,500 24 7,400 0 1,900 0 35,976
Other 800 0 0 0 0 0 800
Total 355,300 4,560 132,400 11,100 11,900 -,14,100 468,240
Source: Foreign Trade Chamber of B&IH, Ministry of Economy, Energy and Development RS
2.3.5. Overview of petroleum product consumption in the Brčko District

Table 2.21 Petroleum product consumption in the Brčko District in 2005
tons Import Consumption
Motor Gasoline 5,400 5,400
Diesel Oil 9,500 9,500
Kerosene type jet fuel 0 0
Light fuel oil 2,200 2,200
Fuel oil 1,400 1,400
Lube oil and greases 300 300
LPG 700 700
Bitumen 1,500 1,500
Other 0 0
Total 21,000 21,000
Source: EIHP

21
2.3.6. Trade and distribution of petroleum products in Bosnia and

Herzegovina
In the pre-war period, trade and distribution of petroleum products in Bosnia and
Herzegovina was dominated by two companies: Energopetrol Sarajevo, covering 70-75% of
the market with its 165 service stations in retail business and well developed wholesale
business, and INA Zagreb, whose retail network of 65 service stations and wholesale
operation held a 25-30% market share.
The Law on Self-employment in Bosnia and Herzegovina, adopted in 1990 (Official Gazette
BIH 26/89 and 29/90), created legal conditions for construction and work of privately-owned
service stations, which stirred a great deal of interest among investors. An intense
development of these facilities started as early as 1991, but the '' boom'' followed after the
war. This Law introduced private competition in the Bosnia and Herzegovina oil market
undermining in this way the bi-polar position of INA and Energopetrol, while the number of
petroleum product importers in Bosnia and Herzegovina mushroomed. However, in 2005
these two companies still held the largest shares of the market (Table 2.22).
Table 2.22 Shares of individual importers of petroleum products in total imports at BIH market
in 2005
% Share
Holdina Sarajevo 16.23
Interina Mostar 7.96
Energopetrol Sarajevo 7.58
Petrol BH Oil Company Sarajevo 6.58
Hifa-Oil Sarajevo 6.55
Antunović Brčko 5.91
Zovko Oil Žepče 5.48
Avart Banja Luka 4.10
Inter Oil Srebrenik 3.13
Super-Petrol Banja Luka 2.66
Other 30.85
Source: Council of Competition BIH
The retail network saw significant changes, both in terms of number of service stations, and
in terms of services offered in these outlets. A great number of the new and modern stations
have been opened. The retail network of the Bosnia and Herzegovina's oil sector in 2005
was made up of 876 service stations, of which 513 were located in the Federation BIH, 353
in the Republic of Srpska and 10 in the Brčko District. About 65% of gasoline stations in BIH
are owned by private owners, holding less than five stations. This indicates that the retail and
distribution network, seen through a number of trade operators, is highly fragmented,
although in the recent years several privately-owned companies have developed a large
number of service stations and thus gained a considerable share in the wholesale business.
By number of retail stations in 2005, the leading companies were Energopetrol Sarajevo with
65 service stations, Petrol Banja Luka with 80 stations and Krajinapetrol Banja Luka with 14
stations. All three companies are predominantly state-owned. Foreign oil companies have a
substantial share in the retail and distribution business, such as Holdina Sarajevo with 36
service stations, Petrol BIH Oil Company Sarajevo with 30 stations and OMV with 12
stations. Having in mind the world standards based on the number of gasoline stations it can
be concluded that Bosnia and Herzegovina is rather ''congested'' with service stations.
Especially indicative is spatial distribution of the stations, as along some roads there are a
number of stations at very small distances. In terms of market competition this can be
considered as acceptable but in terms of economic rationality and cost efficiency they are
rather poorly rational investments. Thus, a certain number of stations show ill economic
performance and some of them are being closed down. This activity actually lacked the
Final Report
22
attempts and efforts of the governments to direct the investments through the physical and
development planning. In comparison, the countries in the immediate or farther regional
surrounding had the following number of service stations by end of 2004: Serbia 1,200, FYR
Macedonia 192, Croatia 580, Slovenia 408 and Hungary 967. In order to prevent further
uneconomical opening of new service stations, we suggest defining possibilities of
broadening retail network and opening new gasoline stations through the physical and spatial
planning. Such high number of service stations, together with fragmented ownership
structure (65% of service stations in BIH are owned by private owners, holding less than five
stations) results in high retail costs and therefore in high mark-ups, which results in relatively
high final price of derivates.
2.4. Analysis of results and recommendations from Oil Import

Study (World Bank 1999)
The Oil Import Study from 1999 and its results and recommendations were analyzed on the
basis of the presentation “F BIH: Implementing the Oil Import Review” received from the
World Bank since the integral Study was not available.
The presentation emphasizes the then problems of oil and petroleum product import: high
retail price of petroleum products, low quality, tax evasion, uneven excise levels in the
territory of BIH, and the lack of coordination in law implementation. Given the fact that the
Study was dates as far back as 1999, during this period some changes occurred: some
requirements regarding improvements in imported petroleum products quality were legally
defined and implemented, excise duties in the whole territory of BIH were brought to equal
levels. The Study pinpointed the transport of petroleum products as a particular problem in
BIH and its impact on their retail prices. Namely, the Study's recommendation was to extend
the use of the Ploče port as a gateway for petroleum product import, i.e., to transport
imported petroleum products by tankers and then distribute them by the railway service
countywide. The total length of railways lines in BIH is 1,031 km. There are also railway
sidings to any one significant production facility which gives the railway operators direct
access to the facilities when handling that type of commodity. The major users of railway
transport are the Chemical Industry based in Tuzla, Željezara (Iron Plant) and BH Steel
based in Zenica, coal mines in Zenica and Tuzla, iron ore mine in Prijedor, Aluminum
Concern in Mostar, industrial companies in the Sarajevo area and petroleum product
distribution companies. In 2001 the project of revitalization and reconstruction of the Pan-
European railway corridor was agreed, to which the EBRD contributed with 21 million EUR.
To some extent the major importers do use the railway line from the Ploče port for transport
of petroleum products, as recommended by the Oil Import Study, but given the dispersive
consumption pattern, large number of service stations and relatively small distances, it is not
realistic to expect that the road transport will be significantly reduced in petroleum product
distribution. Figure 2.11 presents the layout of commercial storage facilities and those
belonging to the Bosanski Brod Refinery, as well as the railway routes in BIH. It is evident
that the railway transport of petroleum products within Bosnia and Herzegovina can be used
since all major commercial storage facilities are connected to the railway network. Therefore,
the recommendation to import petroleum products by maritime routes up to the Ploče port
and then to carry them to the distribution storage facilities by railway is still valid.

23
CROATIA
SERBIA
C 473 291
R 18 100
O 20 900
4 600
A
T
I
A
5 000 17 700
17 600
15 000
42 000
37 000
ADRIATIC SEA 84 000
MONTENEGRO
3
m Oil and oil products storage
FBIH Railways
RS Railways
BD Railways
Figure 2.11 Layout of oil and petroleum product storage facilities and railway routes in BIH
Source: http://www.bih-x.com/transport/grafika/Mapa_zeljeznice_BiH_velika.gif
Final Report
24
2.5. Petroleum product consumption structure
Total energy consumption covers all the needs for energy within the energy system, and the
consumption is determined in a way that import is added to primary energy production and
then the export of primary and transformed energy is deducted. This means that the total of
consumed energy is a sum of energy conversion losses, sector's own use of energy, energy
transmission losses, non-energy use and final energy consumption which is divided in three
main groups – industry, transport and other sectors. In order to determine petroleum product
consumption structure, their share in total energy consumption and trends in energy
consumption, it is necessary to develop an annual energy balance, which is a method of
monitoring the flows of all energy forms, starting from their sale at a specific point to the point
of delivery to final users, where they are finally transformed into some of useful energy forms.
Historical energy balances are described in Module 1 while this Module deals in more detail
with the consumption structure of specific petroleum products.
2.5.1. Petroleum product consumption structure in BIH
Petroleum products make for somewhat more than 20% of total energy consumption in
Bosnia and Herzegovina. The realized total petroleum product consumption in the period
2000-2005 is given in Table 2.23. On the base of the given data, it is visible that consumption
of particular types of derivates shows stagnation or even slight decline. Having in mind the
obvious increase of number of private cars as well as growth of freight transport, actual
consumption of derivates is higher than the consumption registered in authorized institutions.
Therefore it can be assumed that some amount of derivates is illegally imported and sold on
the market of Bosnia and Herzegovina. From that reason, it is important to advance the
control of import and transit of oil derivates, as well as regular reporting and exchange of
data among authorized institutions.
Table 2.23 Realized total petroleum products consumption in 2000-2005
x 1,000 tons 2000 2001 2002 2003 2004 2005

LPG 16.5 15.6 18.6 23.4 21.3 28.7
Motor Gasoline 327.7 315.9 271.5 264.0 280.2 269.8
Kerosene type jet fuel 9.7 8.0 8.2 7.3 5.0 5.3
Diesel Oil 423.3 414.3 407.2 451.5 512.4 513.4
Light fuel oil 157.3 170.3 146.5 112.9 119.1 110.5
Fuel oil 215.5 191.0 166.8 128.0 147.1 118.8
Bitumen 49.8 47.2 56.1 66.1 67.8 76.7
Greases 10.8 10.4 13.4 14.4 14.6 17.1
Other 2.0 1.0 0.9 1.2 10.2 20.4
Total 1,212.6 1,173.7 1,089.2 1,068.8 1,177.7 1,160.7
(FBIH), Ministry of Economy, Energy and Development RS
After determining total energy consumption, an analysis of the energy transformation sector
is carried out, firstly of transformed energy form production in specific energy transformation
facilities and then of energy form consumption for energy transformations in the same
facilities. As far as the energy system of Bosnia and Herzegovina is concerned, the following
energy transformation facilities exist: hydro power plants, thermal power plants, industrial
cogeneration plants, and public cogeneration plants. After determining the transformed
energy production and the energy consumed in this production, the determination of energy
of the sector’s own use follows. It refers to the energy’s own use or energy used for the
operation of energy plants, consumption in all energy transformation plants and in all primary
energy form production plants. When available, quantities of specific energy forms are

25
deducted by consumption for energy transformation and consumption for the sector's own
use, direct or final energy consumption is obtained. It is divided in two main groups – energy
and non-energy final use. Non-energy use includes the consumption of non-energy
petroleum products, such as bitumen, oils, lubricants, etc. The structure of total petroleum
product consumption is given in Figure 2.12. The diagram shows that final petroleum product
consumption prevails in the structure of total consumption.
1.400,0
1.200,0
1.000,0
x 1 000 tons
800,0
1.039 1.029 995 970
600,0 928 917
400,0
200,0
62,6 58,6 70,4 81,7 92,6 114,2
76,5 34,2 53,2 32,6 60,1 31,2 44,1 26,5 64,2 26,2 36,6 39,6
0,0
2000 2001 2002 2003 2004 2005
Total transformation sector Energy sector own use
Non energy use Final energy demand
Figure 2.12 Total petroleum product consumption structures in the period 2000-2005 (BIH)
Source: EIHP
Final petroleum product (energy) consumption can be divided into consumption in transport,
industry, agriculture, etc. The transport sector has the highest share in this kind of
consumption (Figure 2.13).
1.200,0
1.000,0 124,7 133,4 95,9

23,3 17,7 93,2
25,0 118,0 94,3 16,9
68,3 65,3 75,1
21,9 17,2 73,3
800,0 64,9
62,8
x 1 000 tons
175,8 127,1 117,9

175,8
142,8 127,5
600,0
400,0
647,2 629,8 678,9 669,0
582,0 612,6
200,0
0,0
2000 2001 2002 2003 2004 2005
Transport Industry Agriculture Services Households
Figure 2.13 Final petroleum product consumption structures in the period 2000-2005 (BIH)
Source: EIHP
Final Report
26
By place of final consumption almost 70% of petroleum products are consumed in the
transport sector (Figure 2.14) which at the same time carries the highest potential for growth.
A significant increase is recorded in the consumption of diesel fuels, which is the result of an
increased number of passenger vehicles and expansion of freight transport. The
consumption of motor gasoline is in slight decline because of changed vehicle fleet and
significant increase of diesel-run cars in relation to gasoline-run cars. One of the reasons is
surely the price of diesel fuel, which was significantly lower than the price of motor gasoline
during the period observed. Furthermore, after start of production in car factory Volkswagen
Sarajevo Ltd. in 2002, accessibility of new diesel cars was increased, and that also
contributed to the growth in their number.
800,0
700,0
600,0
500,0 314,4 309,7 396,2

x 1 000 tons
395,9
305,2 343,8
400,0
9,7 8,0
300,0 5,0
8,2 7,3 5,3
200,0
321,4 310,2
266,7 259,5 275,4 265,1
100,0
1,7 1,9 1,9 2,0 2,3 2,7
0,0
2000 2001 2002 2003 2004 2005
LPG Motor gasoline Kerosene type jet fuel Diesel oil
Figure 2.14 Realized petroleum product consumption in transport in the period 2000-2005 (BIH)
Source: EIHP
The highest share in petroleum product consumption in the industry is that of fuel oil, which
also has the biggest drop in consumption while other petroleum products record slight
increases (Figure 2.15).
200,0
180,0
160,0
140,0
120,0
x 1 000 tons
131,1 134,4
100,0
103,6 80,7
84,7 69,0
80,0
60,0
40,0 16,0 17,6 18,8

16,6 15,6 16,3
20,0 24,6 24,9 25,8
20,9 20,0 22,7
2,3 1,8 2,0 1,9 1,7 1,9 1,6 2,2 1,7 2,2 1,7 2,6
0,0
2000 2001 2002 2003 2004 2005
LPG Motor gasoline Diesel oil Light fuel oil Fuel oil
Figure 2.15 Realized petroleum product consumption in industry in the period 2000-2005 (BIH)
Source: EIHP

27
Petroleum product consumption in agriculture makes up 8% of total final consumption and

there are no significant changes, which is partly due to the disorganized situation in the
agricultural sector (Figure 2.16).
80,0
3,5
70,0 3,1
5,0
5,4 3,2
60,0 4,5
50,0
x 1 000 tons
40,0
68,5 67,2
59,3 56,2 58,8
30,0 55,2
20,0
10,0
4,0 3,7 3,1 2,9 3,1 3,0
0,0
2000 2001 2002 2003 2004 2005
Motor gasoline Diesel oil Light fuel oil
Figure 2.16 Realized petroleum product consumption in agriculture in the period 2000-2005
(BIH)
Source: EIHP
Petroleum product consumption in services is in slight decline but LPG use is in gradual
increase. In total final energy consumption the share of services is only 2% (Figure 2.17).
30,0
25,0
20,0
x 1 000 tons
15,0
21,6 23,5
20,0
10,0 14,8 15,5 13,9
5,0
1,7 1,5 1,9 2,4 2,2 3,0

0,0
2000 2001 2002 2003 2004 2005
LPG Light fuel oil
Figure 2.17 Realized petroleum product consumption in services in the period 2000-2005 (BIH)
Source: EIHP
Households make for around 10% of total petroleum product consumption. There is a
decrease in the use of heating gas oil and an increase in LPG use. The development of an
LPG market by means of small tanks is a potential factor for increasing domestic use of this
fuel (Figure 2.18).
Final Report
28
160,0
140,0
120,0
100,0
x 1 000 tons
80,0
113,4 123,1
105,1
60,0 72,8
77,5 81,3
40,0
20,0
12,9 16,8 14,6 20,4
11,3 10,3
0,0
2000 2001 2002 2003 2004 2005
LPG Light fuel oil
Figure 2.18 Realized petroleum product consumption in households in the period 2000-2005
(BIH)
Source: EIHP
2.5.2. Analysis of petroleum product consumption structure in FBIH
Energy balances of specific petroleum products in Federation BIH are developed using the
data from the ''Report on Realization of Energy Needs Balance in Federation BIH'' for all
years between 2000 and 2005, the data received from the Foreign Trade Chamber of Bosnia
and Herzegovina and data collected through questionnaire by the Federal Ministry of Energy,
Mining and Industry BIH.
In 2005 petroleum products made for somewhat above 18% of total energy consumption in
Federation BIH (Table 2.24).
Table 2.24 Realized total petroleum product consumption in the period 2000-2005 (FBIH)
x 1,000 tons 2000 2001 2002 2003 2004 2005

LPG 10.8 10.0 12.8 16.6 14.9 22.1
Motor gasoline 200.5 206.8 183.4 171.5 184.4 167.6
Diesel oil 268.4 265.2 266.6 271.3 316.6 331.0
Light fuel oil 121.7 138.2 114.4 80.0 82.4 68.8
Fuel oil 49.9 71.3 54.3 30.9 25.5 14.9
Bitumen 26.4 21.4 29.4 34.2 29.9 39.2
Lubricants 4.0 2.7 4.0 3.5 3.3 3.7
Other 0.7 0.4 0.5 0.5 9.0 19.6
Total 691.5 723.4 673.0 615.1 670.2 671.4
Source: Foreign Trade Chamber of BIH, Federal Ministry of Energy, Mining and Industry BIH
The structure of petroleum product consumption is shown in 2.19. The diagram shows the
final (energy) use of petroleum products prevails in total energy consumption.

29
800,0
700,0
600,0
500,0
x 1 000 tons
400,0 681,5
641,8 621,7 609,2 585,5
555,5
300,0
200,0
100,0
62,5
15,0 31,1 3,6 15,0 24,5 2,4 13,0 33,9 4,4 17,7 38,2 3,7 14,6 42,2 4,2 14,4 9,0
0,0
2000 2001 2002 2003 2004 2005
Figure 2.19 Structure of total petroleum product consumption in the period 2000-2005 (F BIH)
Source: EIHP
Final (energy) use of petroleum products can be divided into consumption in transport,
industry, agriculture, etc. Transport has the highest share in consumption (Figure 2.20).
800,0
700,0
107,0
600,0 95,6
20,0 91,4 65,8
17,9 59,6
43,4 17,0 66,4 12,1
500,0 44,8 46,0 10,6
x 1 000 tons
42,6 46,1
99,1 12,1 38,1 52,4
78,4 78,1 40,2
400,0 56,2
300,0
405,1 412,0 432,9 429,0

200,0 392,6 382,7
100,0
0,0
2000 2001 2002 2003 2004 2005
Figure 2.20 Structure of final (energy) petroleum product consumption in the period 2000-2005
(FBIH)
Source: EIHP
By place of petroleum product consumption as much as 73% of final consumption takes
place in the transport sector, which also has the highest consumption increase rate. A
significant increase is recorded in the use of diesel fuel, which is the result of an increased
number of passenger cars and rapid growth of freight transport through FBIH (Figure 2.21).
The use of motor gasoline slightly dropped due to changed vehicle fleet, i.e., significant
increase in diesel-run cars in relation to gasoline-run cars.
Final Report
30
500,0
450,0
400,0
350,0
198,4 200,2 245,7
x 1 000 tons
300,0 203,5 257,7

206,1
250,0
9,1 7,4
200,0
7,6 4,2
6,6 4,5
150,0
100,0 196,5 203,1 181,4

180,2 168,7 164,8
50,0
1,1 1,3 1,3 1,3 1,6 2,0
0,0
2000 2001 2002 2003 2004 2005
LPG Motor gasoline Kerosine type jet fuel Diesel oil
Figure 2.21 Realized petroleum product consumption in transport in the period 2000-2005
(FBIH)
Source: EIHP
Figure 2.22 shows significant decrease of petroleum product consumption in industry which
in 2005 made for only 7% of total final energy consumption.
120,0
100,0
80,0
x 1 000 tons
70,6
60,0
47,6 51,2
40,0 28,3 22,5

7,8
11,5 12,7 13,1

20,0 12,5 11,4 12,0
16,6 13,4 13,1 13,4 14,7 16,4
1,5 1,2 1,3 1,3 1,1 1,3 1,0 1,5 1,0 1,5 1,0 1,9
0,0
2000 2001 2002 2003 2004 2005
LPG Motor gasoline Diesel oil
Light fuel oil Fuel oil
Figure 2.22 Realized petroleum product consumption in industry in the period 2000-2005 (FBIH)
Source: EIHP
Agricultural use of petroleum products makes for around 8% of total final consumption and
there are no significant changes during the past period (Figure 2.23).

31
50,0
45,0 2,4 1,8

3,9
4,4 3,5
40,0
2,2
35,0
x 1 000 tons
30,0
25,0
41,6 42,5
38,4 36,6 37,0
20,0 34,1
15,0
10,0
5,0
2,5 2,4 2,1 1,8 2,0 1,8
0,0
2000 2001 2002 2003 2004 2005
(FBIH)
Source: EIHP
The consumption of petroleum products in services dropped significantly, but the use of LPG
is gradually growing (Figure 2.24). Services make for only 2% of total final energy
consumption.
25,0
20,0
x 1 000 tons
15,0
10,0 19,1
16,8 15,7
10,4 10,6 8,3
5,0
1,1 0,9 1,3 1,7 1,5 2,3

0,0
2000 2001 2002 2003 2004 2005
LPG Light fuel oil
Figure 2.24 Realized petroleum products consumption in services in 2000-2005 (FBIH)

Households make for about 10% of total final energy consumption. The use of heating gas oil
decreases while LPG use increases (Figure 2.25). The development of LPG market by
means of small tanks carries potential for increasing domestic use of this fuel.
Final Report
32
120,0
100,0
80,0
x 1 000 tons
60,0
100,5
88,2 82,5
40,0 54,3 55,5 43,7
20,0
12,1 15,9
7,4 6,5 8,9 10,3
0,0
2000 2001 2002 2003 2004 2005
LPG Light fuel oil
(FBIH)
2.5.3. Analysis of petroleum product consumption structure in RS
Data required for developing energy balances and determining petroleum product
consumption structure were collected through a survey by the Ministry of Economy, Energy
and Development of Republic of Srpska and through direct contacts with the Refineries.
Moreover, the data from the ''Energy Balance of Republic of Srpska'' from various years were
used, as well as the data of the Foreign Trade Chamber of BH presented in the document
''Oil Industry of Bosnia and Herzegovina – status and development possibilities''.
In total energy consumption of Republic of Srpska petroleum products make for 27% (Table
2.25).
Table 2.25 Realized total petroleum product consumption in the period 2000-2005 (RS)
x 1,000 tons 2000 2001 2002 2003 2004 2005

LPG 5.2 5.1 5.2 6.2 5.8 5.9
Motor gasoline 120.6 102.8 82.7 87.2 90.2 96.8
Diesel oil 146.9 141.5 133.1 171.9 186.3 172.9
Light fuel oil 32.5 28.8 29.2 30.7 34.4 39.5
Fuel oil 163.0 117.1 110.5 95.4 120.0 102.5
Bitumen 22.4 24.8 25.6 30.6 36.6 36.0
Lubricants 6.6 7.5 9.1 10.6 11.0 13.1
Other 1.3 0.6 0.4 0.7 1.2 0.8
Total 499.1 428.8 396.4 434.0 486.3 468.3
Source: Foreign Trade Chamber of BIH, Ministry of Economy, Energy and Development RS
The structure of total petroleum product consumption is shown in Figure 2.26. The diagram
shows the prevalence of final (energy) petroleum product consumption in total energy
consumption.

33
600
500
400
x 1 000 tons
300 377 366

366
328 287 343
200
100 30
33 35 49
42 50
62 38 47 26 50 22
31 30 27 23 22 31
0
2000 2001 2002 2003 2004 2005
Figure 2.26 Structure of total petroleum product consumption in the period 2000-2005 (RS)
Source: EIHP
Final (energy) consumption of petroleum products can be divided into consumption in
transport, industry, agriculture, etc. Transport has the highest share in final consumption
(Figure 2.27).
400,0
26,6
350,0 28,2 31,8
4,9
22,1 26,1 5,2 5,9
23,8 4,7 27,6 25,7
300,0 4,4 20,6 25,4
93,8 24,2 72,1
4,4 75,2
250,0 68,7
x 1 000 tons
73,2 18,9
61,8
200,0
150,0
229,3 218,0 232,8 227,0
100,0 205,5
178,1
50,0
0,0
2000 2001 2002 2003 2004 2005
(RS)
Source: EIHP
By place of petroleum product consumption, about 62% of final consumption takes place in
the transport sector (2.28). There is a significant growth in use of diesel fuel, due to
increased number of passenger cars and freight transport expansion. The use of motor
gasoline is in slight decrease because of changes in vehicle fleet, i.e., increased number of
diesel-run cars in relation to gasoline-run cars.
Final Report
34
250,0
200,0
109,7
142,8 130,5
103,4 131,0
x 1 000 tons
150,0
95,7
0,6
0,6
100,0 0,8
0,7 0,8
0,6
118,5
50,0 101,0 95,1
81,3 85,7 88,6
0,5 0,5 0,5 0,6 0,6 0,6

0,0
2000 2001 2002 2003 2004 2005
Figure 2.28 Realized petroleum product consumption in transport in the period 2000-2005 (RS)
Source: EIHP
Figure 2.29 shows the stagnation in petroleum product consumption in industry which in
2005 made for 21% of total final energy production.
100,0
0,5
90,0
80,0 0,6
0,5 0,6
0,6
70,0
0,5
60,0
x 1 000 tons
80,9
50,0
56,6 59,8
61,2 54,7
40,0
50,4
30,0
20,0
4,0 4,6 5,3
10,0 4,2 3,8 3,9
7,5 8,9 9,7 8,9
0,7 0,6 7,1 0,5 6,5 0,5 0,6 0,6
0,0
2000 2001 2002 2003 2004 2005
Fuel oil LPG
Figure 2.29 Realized petroleum product consumption in industry in the period 2000-2005 (RS)
Source: EIHP
Petroleum product consumption in agriculture makes for only 7% of total final consumption
and is in slight increase (Figure 2.30).

35
30,0
1,0
25,0 0,9 1,2
1,0
20,0 0,9
0,9
x 1 000 tons
15,0
25,6
23,5 23,4
19,7
10,0 18,5
17,1
5,0
1,4 1,2 0,9 1,0 1,0 1,1

0,0
2000 2001 2002 2003 2004 2005
(RS)
Source: EIHP
Petroleum product consumption in services has been slightly increasing, and today it makes
for 2% of total final energy consumption.
7,0
6,0
5,0
x 1 000 tons
4,0
5,3
3,0 4,6
4,4 4,1
3,9 3,9
2,0
1,0
0,5 0,5 0,5 0,6 0,6 0,6

0,0
2000 2001 2002 2003 2004 2005
LPG Light fuel oil
Figure 2.31 Realized petroleum product consumption in services in the period 2000-2005 (RS)
Source: EIHP
Households make up around 9% of total final energy consumption. There is a slight increase
in the use of heating gas oil and LPG (Figure 2.32). The development of an LPG market by
means of small tanks carries potential for increasing domestic use of this fuel.
Final Report
36
35,0
30,0
25,0
x 1 000 tons
20,0
27,7
24,2
15,0 22,9 21,7
20,2 20,5
10,0
5,0
3,7 3,6 3,7 4,4 4,0 4,1
0,0
2000 2001 2002 2003 2004 2005
LPG Light fuel oil
(RS)
Source: EIHP
2.5.4. Analysis of petroleum product consumption structure in the Brčko

District
In determining the structure of petroleum product consumption in the Brčko District the
survey's results were used as in other entities in Bosnia and Herzegovina. There are not
other data on energy consumption in the Brčko District, so that in some cases we used the
estimates on consumption of specific fuels in typical consumer groups. The realized total
petroleum product consumption in the period 2000-2005 is given in Table 2.26.
Table 2.26 Realized total petroleum products consumption in 2000-2005 (BD)
x 1,000 tons 2000 2001 2002 2003 2004 2005

LPG 0.5 0.5 0.6 0.6 0.6 0.7
Motor gasoline 6.6 6.3 5.4 5.3 5.6 5.4
Diesel oil 8.0 7.6 7.5 8.3 9.5 9.5
Light fuel oil 3.1 3.3 2.9 2.2 2.3 2.2
Fuel oil 2.6 2.6 2.0 1.7 1.6 1.4
Bitumen 1.0 1.0 1.1 1.3 1.3 1.5
Lubricants 0.2 0.2 0.3 0.3 0.3 0.3
Other 0.0 0.0 0.0 0.0 0.0 0.0
Total 22.0 21.5 19.8 19.7 21.2 21.0
Source: EIHP
shows the prevalence of final (energy) petroleum product consumption in relation to non-
energy consumption which is a common pattern.

37
25
x 1 000 tons 20
15
21 20 20 19
10 18 18
1 1 1 2 2 2
0
2000 2001 2002 2003 2004 2005
Figure 2.33 Structure of total petroleum product consumption in the period 2000-2005 (BD)
Source: EIHP

transport, industry, agriculture, etc, where transport has the highest share (Figure 2.34).
25,0
20,0 2,5 2,6 1,9

0,5 1,8
0,6 2,4 1,8 0,4 0,4
1,4 1,3 1,5
0,5 0,4 1,5
x 1 000 tons
15,0 3,6 1,3 1,4

3,5 2,6 2,5
2,9 2,6
10,0
12,8 12,3 13,2 13,0

11,3 11,9
5,0
0,0
2000 2001 2002 2003 2004 2005
(BD)
Source: EIHP
By place of petroleum product consumption, about 67% of final consumption is made by the
transport sector (2005). Similarly to other parts of BIH, a significant increase in the use of
diesel fuel is recorded because of a larger number of passenger cars using diesel, while the
use of motor gasoline is in slight decline (Figure 2.35).
Final Report
38
14,0
12,0
10,0
6,3
6,1 7,7 7,7
6,7
x 1 000 tons
6,0
8,0
6,0
4,0
6,4 6,1
5,2 5,1 5,4 5,2
2,0
0,1 0,1 0,1 0,1 0,1 0,1

0,0
2000 2001 2002 2003 2004 2005
Figure 2.35 Realized petroleum product consumption in transport in the period 2000-2005 (BD)
Source: EIHP
Figure 2.36 shows the drop in petroleum product consumption in industry, which in 2005
makes up around 13% of final energy consumption.
4,0
3,5
3,0
2,5
x 1 000 tons
2,6
2,6
2,0
2,0
1,7 1,6 1,4
1,5
1,0
0,3 0,3 0,4
0,3 0,3 0,3
0,5 0,5 0,5 0,5
0,4 0,4 0,4
0,1 0,1 0,1 0,1
0,1 0,1 0,1 0,1 0,1 0,1
0,1
0,1
0,0
2000 2001 2002 2003 2004 2005
Light fuel oil Fuel oil
Figure 2.36 Realized petroleum product consumption in industry in the period 2000-2005 (BD)
Source: EIHP
Petroleum product consumption in agriculture makes for only 8% in relation to total

consumption and is in slight increase (Figure 2.37).

39
1,6
0,1 0,1
1,4
0,1 0,1
0,1 0,1
1,2
1,0
x 1 000 tons
0,8
1,3 1,3
1,2 1,2
1,1 1,1
0,6
0,4
0,2
0,1 0,1 0,1 0,1 0,1 0,1

0,0
2000 2001 2002 2003 2004 2005
(BD)
Source: EIHP
In the past few years petroleum product consumption in services remains at the same level
and total final energy consumption in services participate with only 2% (Figure 2.38).
0,7
0,6
0,5
x 1 000 tons
0,4
0,5
0,3 0,4 0,4
0,3 0,3 0,3
0,2
0,1
0,1 0,1 0,1 0,1 0,1 0,1
0,0
2000 2001 2002 2003 2004 2005
LPG Light fuel oil
Figure 2.38 Realized petroleum product consumption in services in the period 2000-2005 (BD)
Source: EIHP
Households make for around 9% of total final energy consumption. There is a slight
decrease in the use of heating gas oil and gradual increase in the use of LPG (Figure 2.39).
The development of an LPG market by means of small tanks carries potential for increasing
domestic use of this fuel.
Final Report
40
3,0
2,5
2,0
x 1 000 tons
1,5
2,3 2,4 2,1
1,5 1,6 1,4
1,0
0,5
0,3 0,3 0,3 0,4
0,2 0,2
0,0
2000 2001 2002 2003 2004 2005
LPG Light fuel oil
(BD)
Source: EIHP
2.6. Forecasting of petroleum product consumption in BIH until

2020 (according to scenario S2-reference)
Forecast of energy consumption is elaborated in more detail in Module 1 (Book C), and more
detailed overview of projections of petroleum products consumption according to referent
scenario (S2) is covered by this Module. Forecast of total consumption of petroleum products
according to scenarios S1 and S3 is given in Annexes 1 and 2.
Referent energy demand scenario (S2-reference) presumes high gross domestic product
and, consequently the highest energy demand. Energy demand scenario which includes
consumption reduction measures (S3-sustainable) presumes more extensive use of
renewable energy sources and energy efficiency measures. Energy demand scenario with
relatively slow growth of GDP (S1-low growth) presumes the lowest energy demand.
Table 2.27 Forecasting of total petroleum products consumption until 2020 (BIH)
x 1,000 tons 2010 2015 2020

LPG 44.2 62.9 80.9
Motor gasoline 310.5 338.8 364.8
Kerosene type jet fuel 6.7 8.5 10.6
Diesel oil 668.9 841.8 1,029.8
Light fuel oil 162.8 199.8 178.0
Fuel oil 194.9 278.4 359.1
Bitumen 85.1 97.8 112.5
Lubricants 6.2 7.2 8.3
Other 89.0 100.4 122.7
Total 1,568.2 1,935.5 2,266.6
Source: EIHP
The total consumption of petroleum products per citizen will reach 615 kg in 2020, which is
twice more than the consumption in the year 2005 (according to referent scenario). The
highest rate of growth will be realized for diesel fuel, LPG and fuel oil, while the consumption
of other derivates will stagnate or slightly increase.

41
shows the prevalence of final (energy) petroleum product consumption in relation to total
consumption.
2.500
2.000
x 1 000 tons
1.500
1.742
1.494
1.000 1.232
500
151 174
131
185 250
86 119
106 101
0
2010 2015 2020
Figure 2.40 Structure of total petroleum product consumption until 2020 (BIH)
Source: EIHP
2.000
1.800
135
1.600
140 35
1.400 125
28 235
110
x 1 000 tons
1.200 115
22 218
1.000 88
162
800
600 1.198
1.013
400 845
200
0
2010 2015 2020
Figure 2.41 Structure of final (energy) petroleum product consumption until 2020 (BIH)
Source: EIHP
transport sector (Figure 2.42), which at the same time has the most significant growth
potential. Significant increase in the use of diesel fuel is recorded because of growth number
of passenger cars and freight transport too.
Final Report
42
1400
19,9
1200
12,2
1000
x 1 000 tons
6,7
800 812,4
661,0
600 527,4
400 10,6
6,7 8,5
200 330,9 354,9
304,2
0
2010 2015 2020
Motor gasoline Kerosene type jet fuel
Diesel oil LPG
Figure 2.42 Forecasting of petroleum product consumption in transport until 2020 (BIH)
Source: EIHP
The highest share in petroleum product consumption in the industry is that of fuel oil (60% in
2010 and about 50% in 2020) while the biggest growth in consumption has LPG (Figure
2.43).
250
200
118,5
116,3
x 1 000 tons
150
96,7
100
51,4
49,0
50 27,3
49,2
38,7
30,6
2,6 3,2
2,1 5,2 11,4 12,3
0
2010 2015 2020
Figure 2.43 Forecasting of petroleum product consumption in industry until 2020 (BIH)
Source: EIHP

43
Forecasting of petroleum product consumption in agriculture, services and households until

2020 is shown in Figures 2.44, 2.45 and 2.46.
160
5,2
140
120
4,4
100
x 1 000 tons
3,7
80
127,8
60
100,7
79,9
40
20
4,2 5,3 6,7
0
2010 2015 2020
Figure 2.44 Forecasting of petroleum product consumption in agriculture until 2020 (BIH)
Source: EIHP
40
35
30
25
x 1 000 tons
26,5
20
22,4
15
18,4
10
5
8,0
4,0 5,7
0
2010 2015 2020
LPG Light fuel oil
Figure 2.45 Forecasting of petroleum product consumption in services until 2020 (BIH)
Source: EIHP
Final Report
44
160
140
120
x 1 000 tons
100
94,3
80 91,2
86,5
60
40
20 33,6 40,7
28,3
0
2010 2015 2020
LPG Light fuel oil
Figure 2.46 Forecast of petroleum product consumption in households until 2020 (BIH)
Source: EIHP
2.6.1. Forecasting of petroleum product consumption in BIH until 2020

(according to scenario S2-reference)
According to reference scenario, petroleum product consumption in Federation BIH makes

up around 52% of total consumption in Bosnia and Herzegovina.
Table 2.28 Forecasting of total petroleum products consumption until 2020 (FBIH)
x 1,000 tons 2010 2015 2020

LPG 32.4 45.8 55.7
Diesel oil 421.6 538.7 664.9
Light fuel oil 88.4 116.7 126.4
Fuel oil 13.2 14.7 15.6
Bitumen 43.1 49.6 57.1
Other 25.2 29.0 33.3
Total 829.0 1,020.5 1,197.9
Source: EIHP
consumption.

45
1400
24,5
1200
25,5
x 1 000 tons 1000
16,6
800
1075,6
600
910,6
739,4
400
200
1,1 1,8 2,6
71,9 82,7 95,2
0
2010 2015 2020
Non energy use Total transformation sector
Final energy demand Energy sector own use
Figure 2.47 Structure of total petroleum product consumption until 2020 (FBIH)
Source: EIHP
1200
91,4
1000
25,1
95,1
83,2
800 19,4 99,9
73,0
x 1 000 tons
75,3 90,3
14,4
600 56,4
57,8
400 764,2
644,7
535,7
200
0
2010 2015 2020
Figure 2.48 Structure of final (energy) petroleum product consumption until 2020 (FBIH)
Source: EIHP
transport sector (Figure 2.49), which at the same time has the most significant growth
potential.
Final Report
46
900
800
700
600
x 1 000 tons
500 519,8
420,9
400
333,9
300
7,4 9,3
5,8
200
209,8 224,5
100 192,0
4,0 6,7 10,6
0
2010 2015 2020
LPG Motor gasoline
Kerosene type jet fuel Diesel oil
Figure 2.49 Forecasting of petroleum product consumption in transport until 2020 (FBIH)
Source: EIHP
Forecasting of petroleum product consumption in industry, agriculture, services and
households until 2020 is shown in Figures 2.50 to 2.53.
120
1,8
100
1,4
13,6
80 13,4
x 1 000 tons
1,1 41,9
60
40,3
12,6
40
20,2
33,8
25,9
20
19,9
4,1 9,4 8,8
0
2010 2015 2020
LPG Diesel oil Light fuel oil Fuel oil Motor gasoline
Figure 2.50 Forecasting of petroleum product consumption in industry until 2020 (FBIH)
Source: EIHP

47
100 3,7
90
80
3,0
x 1 000 tons 70
2,5
60
50 86,8
40
66,4
30 51,1
20
10
2,7 3,5 4,6
0
2010 2015 2020
Figure 2.51 Forecasting of petroleum product consumption in agriculture until 2020 (FBIH)
Source: EIHP
30
25
20
x 1 000 tons
15 18,9
15,0
10
11,3
5
6,2
3,1 4,4
0
2010 2015 2020
LPG Light fuel oil
Figure 2.52 Forecasting of petroleum product consumption in services until 2020 (FBIH)
Source: EIHP
100
90
80
70
x 1 000 tons
60 61,3
57,9
50 54,0
40
30
20
25,3 30,1
10 21,3
0
2010 2015 2020
LPG Light fuel oil
Figure 2.53 Forecast of petroleum product consumption in households until 2020 (FBIH)
Source: EIHP
Final Report
48
2.6.2. Forecasting of petroleum product consumption in RS until 2020
(according to scenario S2-reference)
According to reference scenario, petroleum product consumption in Republic of Srpska

makes up around 45% of total consumption in Bosnia and Herzegovina.
Table 2.29 Forecasting of total petroleum products consumption until 2020 (RS)
x 1,000 tons 2010 2015 2020

LPG 10.9 16.0 23.8
Diesel oil 235.2 288.1 347.0
Light fuel oil 71.8 80.2 48.4
Fuel oil 180.3 262.0 341.5
Bitumen 40.2 46.2 53.2
Other 63.8 71.5 89.4
Total 713.8 884.5 1,032.7
Source: EIHP
consumption.
1200
1000
800
x 1 000 tons
632,7
600 555,2
469,2
400
76,0
66,0
200 57,4 225,3
159,0
102,5
84,7 104,2 98,8
0
2010 2015 2020
Figure 2.54 Structure of total petroleum product consumption until 2020 (RS)
Source: EIHP

49
700
600 41,1
39,3 130,9
500
x 1 000 tons
37,3 124,5 8,8

400 101,6 8,1
7,6
300
409,5
200 347,8
292,9
100
29,8 35,5 42,4
0
2010. 2015. 2020.
Agriculture Transport Services Industry Households
Figure 2.55 Structure of final (energy) petroleum product consumption until 2020 (RS)
Source: EIHP
By place of petroleum product consumption, about 62% of final consumption in 2010 is made
by the transport sector and growth until 65% in 2020 (Figure 2.56).
450
400
350
300
x 1 000 tons
277,6
250
227,6
200 183,4
150
1,1 1,3
0,9
100
114,0 122,0
50 106,1
2,5 5,1 8,7
0
2010 2015 2020
Figure 2.56 Forecasting of petroleum product consumption in transport until 2020 (RS)
Source: EIHP
The highest share in petroleum product consumption in the industry is that of fuel oil (about
80%) while the biggest growth in consumption has LPG (Figure 2.57).
Final Report
50
140
1,2
1,1
120
0,9
100
x 1 000 tons
80 102,9
101,2
60 82,7
40
20 9,0
6,7 8,2
12,2 14,7
10,2 1,0 1,8 3,2
0
2010 2015 2020
LPG Diesel oil Light fuel oil Fuel oil Motor gasoline
Figure 2.57 Forecasting of petroleum product consumption in industry until 2020 (RS)
Source: EIHP
Forecasting of petroleum product consumption in agriculture, services and households until
2020 is shown in Figures 2.58 to 2.60.
45
1,5
40
1,3
35
1,2
30
x 1 000 tons
25
38,9
20
32,5
15 27,2
10
5
1,4 1,7 2,1
0
2010. 2015. 2020.
Figure 2.58 Forecasting of petroleum product consumption in agriculture until 2020 (RS)
Source: EIHP

51
10
9
8
7
x 1 000 tons
6
5 7,1
7,0
4 6,7
3
2
1 1,7
0,8 1,2
0
2010 2015 2020
LPG Light fuel oil
Figure 2.59 Forecasting of petroleum product consumption in services until 2020 (RS)
Source: EIHP
45
40
35
30
x 1 000 tons
25 30,9
31,4
30,8
20
15
10
5 7,9 10,2
6,6
0
2010 2015 2020
LPG Light fuel oil
Figure 2.60 Forecasting of petroleum product consumption in households until 2020 (RS)
Source: EIHP
2.6.3. Forecasting of petroleum product consumption in Brčko District

until 2020 (according to scenario S2-reference)
According to reference scenario, petroleum product consumption in the Brčko District makes
up around 2% of total consumption in Bosnia and Herzegovina.
Table 2.30 Forecasting of total petroleum products consumption until 2020 (BD)
x 1,000 tons 2010 2015 2020

LPG 0.92 1.16 1.47
Diesel oil 12.14 14.99 17.89
Light fuel oil 2.56 2.86 3.19
Fuel oil 1.43 1.73 1.99
Bitumen 1.72 1.98 2.28
Total 25.46 30.54 36.05
Source: EIHP
Final Report
52
consumption.
40
0,004
35
0,003
30
0,002
25
x 1 000 tons
20 33,309
28,155
15
23,390
10
5
2,070 2,382 2,741
0
2010 2015 2020
Non energy use Final energy demand Total transformation sector
Figure 2.61 Structure of total petroleum product consumption until 2020 (BD)
Source: EIHP
35
2,57
30 0,66
2,29
2,34
25 0,58 3,76
1,96
2,18 3,22
0,50
x 1 000 tons
20
1,67
2,66
15
24,03
10 20,05
16,38
5
0
2010 2015 2020
Figure 2.62 Structure of final (energy) petroleum product consumption until 2020 (BD)
Source: EIHP
The structure of petroleum product consumption (according to reference scenario) in
transport, industry, agriculture, services and households until 2020 is shown in Figures 2.63
to 2.67.

53
30
25
x 1 000 tons 20
14,99
15
12,51
10,04
10
5 8,46
6,12 7,16
0,22 0,38 0,58
0
2010 2015 2020
Figure 2.63 Forecasting of petroleum product consumption in transport until 2020 (BD)
Source: EIHP
4
3
1,98
x 1 000 tons
3
1,73
2 1,43
2 0,56
0,49
1 0,40
0,77
0,65
1 0,55
0,16 0,19
0,14
0,14 0,19 0,26
0
2010 2015 2020
Figure 2.64 Forecasting of petroleum product consumption in industry until 2020 (BD)
Source: EIHP
3
0,04
2
0,04
x 1 000 tons
0,04
2
2,14
1 1,83
1,55
0,08 0,10 0,11

0
2010 2015 2020
Figure 2.65 Forecasting of petroleum product consumption in agriculture until 2020 (BD)
Source: EIHP
Final Report
54
0,7
0,6
1 000 tons 0,5
0,4 0,50
0,43
0,3 0,37
0,2
0,1
0,13 0,15 0,16
0,0
2010 2015 2020
LPG Light fuel oil
Figure 2.66 Forecasting of petroleum product consumption in services until 2020 (BD)
Source: EIHP
3,0
2,5
2,0
x 1 000 tons
1,5 2,09
1,90
1,75
1,0
0,5
0,43 0,44 0,48
0,0
2010 2015 2020
LPG Light fuel oil
Figure 2.67 Forecast of petroleum product consumption in households until 2020 (BD)
Source: EIHP
2.7. Exploration of oil and gas reserves

In the world of total energy consumption, oil takes the primary position in total energy. It is
estimated that today the global oil reserves are such that, with present consumption trends,
they can meet needs in the next 45-50 years. Oil is the key of global development and a
great deal of attention is given to exploration, exploitation, production and transport of oil.
The European countries import around 90% for their needs and meet only 10% of their
needs from their own sources.
In the 1960s the price of crude oil was very low, 1.5 USD per barrel. Due to the low prices of
oil, not much attention was dedicated to the explorations. However, since 1973, when the first
world energy crises broke out, also known as “the oil crisis”, which saw crude oil price rising
five-fold, the oil exploration issue has been addressed very seriously. It was a reason to start
oil exploration in Bosnia and Herzegovina as well. In as early as 1973 Energoinvest Sarajevo
received the exploration and concessionary guidelines, which were executed by the Bosanski

55
Brod Oil Refinery. Exploration and concessionary right was conceded for a period of 10 years
and after that extended for the period 1983–1993.
In Bosnia and Herzegovina the oil and gas exploration started as far back as 1889, when the
Austrian geologists Katzer and Hofer explored the area of Majevice, in the villages of Zavid
and Ražanj, near Priboj, on the Tuzla–Zvornik road. The Austrian geologists drilled several
wells up to 50 meters deep, where small quantities of oil and gas were obtained. The works
were soon suspended because of lack of financial support.
Between the two World Wars, explorations were carried out only in northeast Bosnia. Oil was
found in several wells in Požarnica and Simin Han near Tuzla. In 1939 about 300 tons of oil
was extracted and transported to the Bosanski Brod Oil Refinery but due to small-scale
production, costly transport, lack of equipment, skilled workers and finally the war, the
production was stopped in 1943.
After the Second World War, in 1948 the enterprise for exploitation of oil and gas in
Pažarnica near Tuzla was established. However, in 1962 its operation ceased, and the staff
and equipment were transferred to INA Zagreb and NIS-Novi Sad, since at that time the
development of Bosnia and Herzegovina was directed towards coal production and
development of coal mines. From 1963 to 1973 the exploration right in Bosnia and
Herzegovina was held by the INA–NAFTAPLIN company from Zagreb. The company
extended the exploration area from north-east Bosnia to the area of central and outer
Dinarides Mountains. At that time, in addition to gravimetric and geomagnetic explorations,
several deep drills were made (Tuzla-1, 3,539 meters; Vareš-1, 1,202 meters and Glamoč-1,
4,212 meters). In 1973, Energoinvest Sarajevo was given the 10-year right for oil and gas
exploration in Bosnia and Herzegovina. In this period the exploration executor was
Energoinvest-Bosanski Brod Oil Refinery, where in 1974 the Section for oil and gas
exploration was founded. The Refinery mainly provided the means for exploration works from
its own sources and in 1983 it founded the branch company for oil and gas exploration in the
territory of Bosnia and Herzegovina. In 1990 it became an independent company within the
Energoinvest Group named Energoinvest–Energonafta Bosanski Brod.
In the period from 1963 to 1991 extensive oil and geological explorations were carried out.
Exploration works were conducted in the framework of two fundamental projects:
• North Bosnia Project, funded by its own resources and 2.5 million USD by the
World Bank's loan;
• Dinarides Project, in full funded by the American AMOCO Company. For this project
AMOCO established AMOCO–Yugoslavia Petroleum Company head-quartered in
Zagreb, in the Zagreb representative office of the Bosanski Brod Oil Refinery.
North Bosnia Project covered the exploration area of Bosnia’s northern area which covers
southern parts of the Panonian Tertiary Basin, i.e., inner Dinarides Mountain or the belt of
horsts and graben of north Bosnia. The Bosnian ophiolitic zone forms the south border of the
Basin and includes an older Mesozoic -Palaeozoic complex as well. The north border is the
Sava River, and western and eastern borders are the Rivers Una and Drina respectively. The
south border is defined by the line Novi Grad – Prijedor – Banja Luka – Doboj – Tuzla –
Zvornik. The exploration area covers a surface of 12,000 square km. In North Bosnia
extensive stratimetric measurements were conducted before 1981, covering all stratigraphic
members. The analysis of stratigraphic, paleontological, sedimentological, chemical, and
physical features of the rocks gave favorable indicators for paleontographic reconstruction
and corroborated the assumptions about potential existence of significant hydrocarbon
accumulations. Geochemical investigations were conducted on 300 rock samples from the
terrain surface, from 15 drills and on four oil samples. The results of these investigations
proved the Oligocene through Sarmatian source rocks to be the best quality. Good potential
was found in the samples of Paleocene-Eocene flysch. Gravimetric investigations were
conducted on the area of about 13,000 square km with 60,000 points with the density of 4 to
10 points per square km. Also, detailed gravimetric investigations were conducted on 206 km
long seismic profiles. The results were shown in numerical form on maps of Bourger
anomalies and vertical gradients as well as regional and residual anomalies of Earth
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gravitation force for specific rock density. The results were not analyzed in full due to the lack
of resources. Geomagnetic investigations initially included a terrestrial geomagnetic survey
in parallel with gravimetric of the same point network and, later along, seismic profiles. In
1987 the aero-geomagnetic survey of whole north Bosnia was carried out. Terrestrial
measurement covered the area of nearly 4,000 square km with a total of 16,000 points. In
1988, 1989 and 1990 detailed geomagnetic and gravimetric measurements were conducted
on seismic profiles. Geoelectrical measurements were conducted at smaller scales along
30-odd geoelectrical profiles in the area of Semberija, Majevica and Tuzla Basin. These
measurements enabled defining, in more detail, the distribution and burial of specific shallow
Tertiary horizons and the depth of burial of Cretaceous-Paleogene rock complex. Seismic
reflection profiling has been conducted on 144 profiles with a total length of 3,500 km by use
of the multiple overlay method (with the length of registration signal of 5 to 7 seconds), which
enables, with interactive data analysis, a comparison with other types of investigations. In
this period (1973-1991) the exploration drill was conducted on the wells Bijeljina-1, Brvnik-1
and Obudovac-1. On the wells Brvnik-1 (3,913 m) and Obudovac-1 (3,296 m) the presence
of oil was registered but without economic value.
On the basis of the present level of exploration of northeast Bosnia, it is considered that the
crude oil reserves are there in the four priority areas:
• The area south of Bosanski Šamac with reserves estimated to 64.5 million barrels
(about 9.2 million tons);
• The area southwest from Orašje with reserves estimated to 42.5 to 108.4 million
barrels (about 6.1-15.5 million tons);
• The Tinje River valley in the Tuzla region with reserves estimated to 99.8 million
barrels (about 14.3 million tons);
• The surroundings of Lopar with a surface of 21 km2 with reserves estimated to 83.2
million barrels (about 11.9 million tons).
The estimated crude oil reserves on these four sites, marked as promising ones in terms of
oil prospecting, amount to about 355 million barrels or about 50 million tons. In addition to the
above mentioned priority and perspective areas, in northeast Bosnia several smaller areas
have been marked for more in-depth explorations to be undertaken after obtaining positive
results in the these four sites. It should be noted that the estimate was made only for
northeast Bosnia (Semberija, Majevica, Tuzlansko-Loparski basin, Šamačko-Oraška
Posavina) and it was only possible due to a relatively high level of site exploration. For the
central and western part of north Bosnia (Brodska Posavina, Lijevče polje, the area of Banja
Luka, Prijedor and Bosanski Novi) the estimate could not be made due to the low level of
exploration.
Together with the then domestic companies (Energoinvest Bosanski Brod, Geoinženjering
Sarajevo, Industroprojekt Zagreb, Naftagas Novi Sad, etc.), three UK companies (GECO-
Geophysical Company Ltd., EXLOG-Exploration Logging Services and ECL-Petroleum
Technogis Co.) were involved in the North Bosnia project as well. They prepared the
perspective study of north Bosnia on the basis of the available data. All exploration works
(geological and geophysical explorations, geochemical analysis, and investigation drilling)
were funded from domestic sources, while World Bank's funds paid for the services of the
foreign companies. All available documentation concerning these explorations (geological,
geophysical explorations and data from investigation by 69 drills) is placed in the archives of
the Bosanski Brod Oil Refinery.
The Dinarides Project covered the area of central and outer Dinarides Mountains, i.e., the
terrain of the central Bosnia (Sarajevo – Zenica basin) and Herzegovina bituminous belt. In
the period between 1963 and 1973 INA – NAFTAPLIN conducted various geological and
geophysical explorations and exploratory drilling at four sites. In 1988 Energoinvest financed
the preparation of the Synthesis of geological and oil-geological documentation as a basis for
further exploration works in Bosnia and Herzegovina. Two sedimentary complexes of central

57
Dinarides – Tertiary series and Mesozoic -Palaeozoic series were found in the area of central
Bosnia. In the outer Dinarides zone, which spans over southwest Bosnia and entire
Herzegovina, there dominates carbonate development of Mesozoic sediments together with
a lot of elements which indicates potential hydrocarbon accumulations. During 1989 aero-
geomagnetic measurement of the eastern part of the territory (covering 16,500 square
kilometers) was conducted at two kilometer wide sections. These works, which were to cover
the rest of Bosnia and Herzegovina territory as well, were suspended at the beginning of the
war in Croatia. When the American company AMOCO was involved in the works, geological
explorations of structural-tectonic formations of Dinarides were undertaken. The explorations
included the study of the existing geological documentation, field survey and laboratory
analyses of rock samples in order to define structural-tectonic setup of the terrain and identify
source, reservoir, and roof rocks. After that, reflective seismic exploration and magnetic
and telluric probing was carried out. In early 1992, with the outbreak of the war, the
exploration activities ceased.
A total of about 150 million USD were invested in oil and gas exploration, and the results
indicated that both areas were rather perspective in terms of oil and gas prospecting. The oil
and gas exploration results in Bosnia and Herzegovina justify further explorations and
indicate that there are realistic possibilities of finding commercially viable deposits.
The explorations of oil deposits in Bosnia and Herzegovina require considerable resources.
They are mostly secured from the state's funds and investments of the companies which
showed an interest in this business. Before 1992, the overall practice was to secure the
resources for oil and gas explorations earmarking a portion in petroleum product retail price.
In Yugoslavia the allocation of such funds was based on the proportion of the petroleum
product consumption of each of the federal republics. These funds in BIH were used mostly
for exploration within the North Bosnia project. A similar model of funding further oil and gas
explorations could be implemented in Bosnia and Herzegovina today. Also, the possibility of
awarding concessions should be considered, as it is a significant factor in attracting foreign
capital which is the most used financing method in the oil sector. Currently high price of oil
can surely be an incentive in attraction of potential investors for continuation of oil reserves
exploration.
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3. OVERVIEW OF THE CURRENT PRICE SYSTEMS AND
COMPARISON TO THE EU COUNTRIES

59
3.1. Petroleum product pricing in the Republic of Bosnia and

Herzegovina
The Decision on free price setting for motor gasoline, diesel fuel and fuel oil (Official Gazette
FBIH 52/00) provides for free setting for petroleum product prices but the custom levies,
special tax on petroleum products (excise), road charges (road toll) and value added tax are
regulated under the appropriate legislation.
3.1.1. Bosnia and Herzegovina's legal framework on tariffs
Custom legislation of the Republic of Bosnia and Herzegovina includes the Law on Custom
Policy of Bosnia and Herzegovina (Official Gazette BIH 57/04) and the regulation adopted by
the Parliamentary Assembly of Bosnia and Herzegovina, Council of Minister of Bosnia and
Herzegovina and/or Steering Committee for implementation in accordance with the European
Union regulations. The Law regulates the principal elements of the custom protection of the
BIH economy, rights and obligations of actors in custom procedures, custom areas, custom
supervision and freight custom clearance procedures, and other institutes of the custom
protection system.
The tariff marks and tariff rates for mineral fuels, mineral oils and product of mineral oil
distillation, bitumen substances, and mineral waxes are laid down in the Decision on
harmonization and determination of custom tariff in BIH (Official Gazette BIH 58/04 and
11/05) (its Section 27).
Custom duties are applied on imported goods deriving from the countries or groups of
countries with which BIH has concluded agreements with a preferential status clause, or
countries which implement such a clause on goods deriving from BIH. Custom duties are not
applied in cases where special autonomous custom duties are set out for specific goods
deriving from specific countries or where the preferential tariff rates may be applied in
accordance with agreements that BIH has concluded with specific countries or group of
countries. Under the Custom Tariffs of Bosnia and Herzegovina, the tariff rate for crude oil is
0%, while the tariff rate for other liquid fuels is 10%, except the rate for jet fuel which is 5%.
Liquid fuels used in specific processes and those used in chemical processing are not
subject to custom duties, i.e., the tariff rates in their cases equal 0%.
Implementation of tariff rates different from those set out in the Custom Tariffs of BIH is
justified if such rates are set out in the laws of Bosnia and Herzegovina. Instead of tariff rates
set out in the Custom Tariffs of BIH, the preferential tariff measures contained in agreements
affording preferential tariff procedure that BIH concluded with certain countries are applied.
One of the most important agreements is the Central European Free Trade Agreement
(CEFTA) whose signatory Parties are Albania, Bosnia and Herzegovina, Montenegro,
Croatia, Macedonia, Moldavia, Serbia and UNMIK/Kosovo, and which includes petroleum
product trade among these countries.
3.1.2. Legal framework of Bosnia and Herzegovina on excise duties on oil

and petroleum products
Law on Excise Duties in Bosnia and Herzegovina (Official Gazette BIH 62/04) regulates the
taxation on the trade of specific goods (excise goods). Petroleum products fall under this
category. Excise duty is charged at the point of billing or at the point of delivery to another
person if the delivery is conducted before invoice issuance, or at the point of custom
clearance in case of imported excise products and delivery of these products in the custom
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free zones and specialized storage facilities. The excise duty is charged also in the case
where a deficit is found that can not be justified with force majeur, write-off or own use of
excise goods.
An excise payer is a legal person and entrepreneur importing or trading excise goods and is
obliged to declare to tax authorities the place of carrying out its activity, before commencing
to carry out the activity which is subject to tax obligation.
Excise duty on petroleum products is paid by liter at +15 °C in absolute amount as follows:
• Kerosene 0.30 KM
• Diesel fuel 0.30 KM
• Heating gas oil and light special oil 0.30 KM
• Unleaded motor gasoline 0.35 KM
• Motor gasoline 0.40 KM
In the petroleum product trade the road tax is paid in the amount of 0.15 KM per liter. Excise
duty is not charged on exported excise goods.
The Rules for implementation of the Law on Excise Duties in Bosnia and Herzegovina
(Official Gazette BIH 18/05) regulates that excise payers who used excise products as raw
material for the production and processing of excise products in Bosnia and Herzegovina
have the right to deduct the charged excise duties on output products with the amount which
was previously paid as excise on products used as a production material.
3.1.3. Law on Value Added Tax
Pursuant to the Law on Value Added Tax (Official Gazette BIH 09/05) VAT is paid on trading
in goods and services which tax payers carry out for compensation, in the frame of their
activities, in the territory of Bosnia and Herzegovina. VAT is also paid on goods imported in
Bosnia and Herzegovina.
Trading in goods is a transfer of rights to dispose with goods to a person who can dispose
with such goods as an owner. Trading in goods is considered a delivery of products on the
basis of a contract under which a fee is paid at sale or purchase of goods; delivery of goods
on the basis of a lease agreement for a certain period of time on the basis of sale agreement
with deferred payment foreseeing that ownership right is transferred upon the payment of the
last installment at latest; transfer of business assets of the tax payer by an authorized person
including liquidators, estate administrators, and supervisors; use of product of the tax payer
for non-business purposes and exchange of goods for other products or services.
Import of goods implies any bringing of products in the custom area of Bosnia and
Herzegovina. VAT is charged on all imported products. VAT is not charged on products
which are cleared for temporary storing on entering Bosnia and Herzegovina, products which
are cleared for custom approved procedure or use as foreseen by this Law for which the
temporary import procedure or custom transport procedure have been initiated. Such
procedure foresees import tax exemption.
Persons obliged to VAT payment are tax payers involved in trading in goods and services on
which the VAT is charged; tax representative appointed by the tax payer who has not a seat
or permanent business unit in Bosnia and Herzegovina, but carries out trade in goods and
services in Bosnia and Herzegovina; any person stating VAT in the invoice or other
document serving as an invoice and who, under this Law, is not obliged to charge and pay
VAT. In case of import the VAT payer is the receiver of goods, i.e., the custom payer as
determined in accordance with custom regulations.
The tax base of goods and service trading is a taxable amount of compensation (in money,
goods or services) the tax payer receives or is to receive for delivered products or services,
including subsidies directly related to the price of these products or services, where VAT is
not included, if not specified otherwise by this Law. The tax base includes: excise, custom
and other import duties, other public revenues, except VAT; all related costs the tax payer
charges to the receiver of goods or services (fees, packaging cost, transport, insurance, and

61
other extra costs charged to the customer). If the compensation or a part of the
compensation is not paid in money but in goods or services, the tax base implies the market
value of such goods or services at the moment of delivery, which does not include VAT.
The tax base for products imported in Bosnia and Herzegovina is the value of such products
determined in accordance with the custom rules. The tax base of imported products also
includes: excise, custom and other import duties, other public revenues, except VAT; all
related costs (fees, packaging costs, transport and insurance) incurred after the product
import until its first destinations in Bosnia and Herzegovina.
The regular VAT rate on taxable goods and services and imported goods in Bosnia and
Herzegovina is 17%.
The export of goods is exempted from VAT obligation as well as the import of products
intended for the needs of free zones and for storage, except custom storage; delivery of
products for temporary storage with a previous clearance by UIO in accordance with custom
regulations; deliveries in custom free zones and custom free stores, deliveries within the free
zones and free stores; deliveries to custom stores.
3.2. Pricing of petroleum products in the Republic of Croatia

The prices for petroleum products are set in accordance with the Rules for setting prices for
petroleum products (Official Gazette HR 03/2007), Regulation on special tax levels for
petroleum products (Official Gazette HR 44/2007) and the Law on Value Added Tax (Official
Gazette HR 47/95, 106/96, 164/98, 105/99, 54/00 and 73/00).
The Rules for setting prices for petroleum products sets out the maximum level of petroleum
product prices for legal and natural persons involved in production and/or import and/or retail
trade of petroleum products. The Rules apply to the following products:
• motor gasoline EUROSUPER BS 95 with up to 10 mg/kg of sulfur content,
• motor gasoline EUROSUPER 95 with up to 50 mg/kg of sulfur content,
• motor gasoline SUPER 95 with over 50 mg/kg of sulfur content,
• motor gasoline SUPER 98 with over 50 mg/kg of sulfur content,
• diesel fuel EURODIESEL BS with up to 10 mg/kg of sulfur content,
• diesel fuel EURODIESEL with up to 50 mg/kg of sulfur content,
• diesel fuel DIESEL with over 50 mg/kg of sulfur content,
• gas oil (extra light oil),
• blue diesel (blue-dyed diesel fuel).
Sale price consists of:

• the base for sale price calculation,
• related costs in products whose price is set out FOB gasoline station,
• retail and wholesale costs (mark-up – M).
Calculation base for sale price expressed in HRK/ton is formed by the formula:
CB = X1 × X2 + X3 (3-1)
Where:
CB – is the calculation base,
X1 – is the average mean price of petroleum products – average quotations published in the
Platt’s European Marketscan at parity CIF Mediterranean Basis Genova/Lavera, in the
calculation period (the day following the previous calculation through to the day of a new
calculation),
X2 – is the middle selling exchange rate in HRK/USD – Croatian National Bank Zagreb
(HNB) in the calculation period (the day following the previous calculation through to the day
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of a new calculation). Exceptionally in case of abrupt exchange rate changes (± 4%) instead
of an average exchange rate, the exchange rate on the day of the calculation will apply.
X3 – is the amount for expenses of primary storage and handling of 215.89 HRK/ton (0.166
HRK/litre) for motor gasoline, and 208.77 HRK/ton (0.176 HRK/liter) for diesel fuel, gas oil
(heating gas oil) and blue diesel (blue-dyed diesel fuel).
The average price (X1) implies average middle quotations cargoes FOB Med – Basis Italy
and cargoes CIF Med – Basis Genova/Lavera prices from Platt’s European Marketscana, for
the following products:
• motor gasoline EUROSUPER BS 95 – 1.02 x Premium gasoline 50 ppm CIF Med,
• motor gasoline EUROSUPER 95 - Premium gasoline 50 ppm CIF Med,
• motor gasoline SUPER 95 – 0.95 x Premium gasoline 50 ppm CIF Med,
• motor gasoline EUROSUPER 98 – 1,06 x Premium gasoline 50 ppm CIF Med,
• motor gasoline SUPER 98 – 1.02 x Premium gasoline 50 ppm CIF Med,
• motor gasoline EUROSUPER 100 – 1.10 x Premium gasoline 50 ppm CIF Med,
• diesel fuel EURODIESEL BS – 1.02 x Diesel 50 ppm CIF Med,
• diesel fuel EURODIESEL - Diesel 50 ppm CIF Med,
• diesel fuel DIESEL - Gasoil 0.2% CIF Med,
• gas oil (heating gas oil) - Gasoil 0.2% CIF Med,
• blue diesel (blue-dyed diesel fuel) - Gasoil 0.2% CIF Med.
Related costs and transport costs (main line transport and handling costs, and retail and
wholesale trading costs - mark-up) are set up for motor gasoline and diesel fuels in the
absolute amount of M=0.60 HRK/l, and for gas oil (heating gas oil) and blue diesel (blue-
dyed diesel fuel) in the absolute amount of M=0,40 HRK/l.
The petroleum product wholesale and retail prices are formed in a way that sale price
calculation base, converted in liters, is added by related and trading costs (mark-up-M) by
the following formula:
SP=CB x ρ/1000 + M (3-2)
where:
SP- sale price,
CB-calculation base (3-1),
ρ- petroleum product's density (for motor gasoline 0.772 kg/l; for distribution and oil gas
(heating gas oil) 0.845 kg/l), and
M-mark-up HRK/l.
A fee is added on the wholesale price for financing the work of the Croatian Agency for
Compulsory Stocks of Oil and Petroleum Products and financing compulsory stocks of oil
and petroleum products in the amount set out by the Government on an annual basis at the
proposal of the Agency for Compulsory Stocks (HANDA). In 2007 this amount is set to 150
HRK of petroleum products by the ton. Sale prices for petroleum products are adjusted on a
fortnight basis, every other Monday.
Sale price is increased by a special tax (excise duty) set out by the Regulation on special tax
levels for petroleum products (Official Gazette HR 44/2007) and by value added tax of 22%
as specified in the Law on Value Added Tax (Official Gazette HR 47/1995, 106/1996,
164/1998, 105/1999, 54/2000 and 73/2000).

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3.2.1. Legal framework for special taxes (excise duties) on oil and
petroleum products in the Republic of Croatia
The legal basis for special tax (excise duty) on oil and petroleum products in Croatia is
regulated under the Law on Special Tax on Oil and Petroleum Products (Official Gazette HR
55/2000, 101/2001, 127/2000, 27/2001, 107/2001 and 136/2002 – revised version, 123/2003
and 57/2006) and the Rules for implementation of the Law on Special Tax on Oil and
Petroleum Products (Official Gazette HR 63/2000, 119/2001 and 26/2003) and Rules for
implementation of the Law on Special Tax on Petroleum Products referring to eurodiesel-
blue-dyed diesel fuel (Official Gazette HR 179/2003). These laws and by-laws regulate the
taxation of petroleum products produced and sold in Croatia, exported from Croatia, and
imported in the Croatia's custom area, methods and procedures for implementation of the
taxation and special procedures of utilization and control over consumption of eurodiesel-
blue-dyed diesel fuel, heating gas oil and special light fuel oil. The level of special tax for
specific petroleum products is laid down under the Regulation on levels of special tax on
petroleum products (Official Gazette HR 44/2007).
Petroleum products include: motor gasoline (MB-98, MB-86, BMB-95 and BMB-91) and other
types of leaded and unleaded gasoline regardless of octane value and brand name; diesel
fuel (D-1, D-2 and D-3) and other types of diesel fuels regardless of brand name; eurodiesel-
blue-dyed diesel fuel; heating gas oil and special light fuel oil; all types of light, medium and
heavy fuel oil; LPG; kerosene type jet fuel and all types of kerosene.
Producers and importers of petroleum products and the authorities responsible for material
stocks are tax payers in cases where petroleum products are imported for one’s own
account. However, if petroleum products are imported for other persons’ accounts, the
special taxation obligation lies with the beneficiary of imported goods.
Special tax on petroleum products is paid by the liter at +15 °C as specified in the Regulation
on level of special tax on petroleum products (Official Gazette HR 44/2007), as follows:
• motor gasoline (MB-98 and MB-86), and other types of leaded
2.40 HRK
gasoline regardless of octane value or brand name
• motor gasoline (BMB-98, BMB-95 and BMB-91), and other types of 1.65 HRK
unleaded gasoline regardless of octane value and brand name
• diesel fuels (D-1, D-2 and D-3) and other types of diesel fuels 1.00 HRK
regardless of octane value and brand name
• eurodiesel - blue-dyed diesel fuel 0.00 HRK
• heating gas oil and light special 0.30 HRK
Special tax on petroleum products is paid by the kilogram of net weight at +15 °C under the
Regulation on level of Special tax on petroleum products (Official Gazette HR 44/2007) for
the following petroleum products:
• all types of fuel oils light, medium, heavy 0.00 HRK
• kerosene type jet fuel 0.00 HRK
• LPG 0.10 HRK
• all types of kerosene 1.40 HRK
This method of setting up levels of excise duties on petroleum products (through
Regulations) gives the Government a leverage for swift and efficient action on the domestic
market in order to influence the petroleum product retail price trends in case of crude oil price
distortions on the world market which inevitably affect the domestic market.
This Law also defines the moment when tax obligation comes to be, calculation and payment
of special tax, declaring special tax and submitting reports, exemption from special taxes
(export of petroleum products, delivery from tax payer's stores into his wholesale store,
delivery from producer's store in the store of the material stock authorities, etc.), reporting to
custom authorities on export of petroleum products, measurements, marking and placing
petroleum products on the market, record keeping and supervisions, etc.
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Special provisions regulate the right to use heating gas oil and eurodiesel - blue-dyed diesel
and their sale and method of sale because of low excise duty (0.30 Kn per litre) and the fact
that some petroleum products are not subject to excise. Further elaboration of these
provisions is contained in the Rules for implementation of the Law on Special Tax on
Petroleum Products and the Rules for implementation of the Law on Special Tax on
Petroleum Products referring to eurodiesel - blue-dyed diesel fuel.
The Rules for implementation of the Law on Special Tax on Petroleum Products (Official
Gazette HR 63/2000, 119/2001 and 26/2003) regulate the form and content of Reports on
produced, imported, processed, and supplied quantities of crude oil and petroleum products,
calculated and paid tax on petroleum products and stock status, as well as the form and
content of declaration on production and wholesale storage facilities for petroleum products,
declaration of specially determined sale stocks of heating gas oil, medium fuel oil and
eurodiesel - blue-dyed diesel fuel, declaration on special stock for jets supply and declaration
on imported quantities of petroleum products stocked at one's own wholesale store. These
Rules also define the forms for required reports.
Rules for implementation of the Law on Special Tax on Petroleum Products referring to
eurodiesel - blue-dyed diesel fuel (Official Gazette HR 179/2003) regulate the way of
utilization and control of consumption of this fuel, which is used for agricultural machinery by
commercial registered agricultural producers for treating agricultural land or harvesting crops.
This fuel is also used in fishery vessels at sea and vessels and machinery in aquaculture
activity.
The Rules are set to ensure efficient supervision over the use and consumption of these
petroleum products and reducing the possibility of abuse as much as possible.
3.3. Petroleum product price setting in the EU

The EU member states import crude oil and raw materials for refineries and petrochemical
industry free of custom. Petroleum products are subject to custom duties. The tariff on heavy
fuel oil and gas oils (with over 0.2% m/m sulfur content) is 3.5%. As for light petroleum
products the tariff is 4.7%, and its application depends on the petroleum products’ origin.
Namely, custom tariffs do not apply to petroleum products imported from the EU countries
and EFTA (European Free Traders Association) members and ACP countries (Africa,
Caribbean and Pacific). Nor do they apply to petroleum products imported from Romania,
Bulgaria, Czech Republic, Lithuania, Hungary, Estonia, and Israel. In the frame of the
Generalized System of Preferences (GSP) petroleum products from over 150 non-OECD
countries, including Venezuela and former USSR countries, may be imported free of custom
duties. The exemptions are petroleum products imported from Libya, Russia, and Saudi
Arabia which are subject to full tariff duties. Hence, the custom duty is charged on those
petroleum products intended for use in the EU for most imports (from Saudi Arabia, Libya,
and Russia and some OECD members including USA and Canada). Exempted is gas oil
(with up to 0.2% m/m sulfur content) where tariff rate is permanently lowered from 35% to 0%
regardless of its origin.
Under the Directive 2003/96/EC the taxation level that state members should apply on
energy products and electricity must not fall below the minimum taxation level this Directive
lays down. Also, taxation level implies the overall indirect tax burden (except VAT)
chargeable on quantity of energy products at the time of delivery for consumption. Given the
fact that each EU member has its own VAT rate and its own methods of applying VAT on
specific groups of products and services, prices for petroleum products differ from one state
to another, as does the level of taxation and excise burden on the base price of petroleum
products (Table 3.1, Figure 3.1).

65
Table 3.1 Prices of unleaded 95 octane gasoline (*in the first half of the year)
EUR/l 2000* 2001* 2002* 2003* 2004* 2005* 2005 (VII-XII)

Belgium 0.96 1.00 0.95 0.98 0.99 1.07 1.30
Czech Republic - - - - - 0.81 0.98
Denmark 1.00 1.07 1.04 1.11 1.07 1.10 1.27
Germany 0.96 0.97 0.99 1.11 1.08 1.11 1.28
Estonia - - - - - 0.67 0.82
Greece 0.67 0.72 0.69 0.75 0.74 0.77 0.93
Spain 0.75 0.79 0.77 0.83 0.80 0.84 1.00
France 1.04 1.00 0.96 1.05 1.00 1.04 1.21
Ireland 0.82 0.95 0.80 0.87 0.87 0.94 1.05
Italy 1.00 1.04 1.00 1.07 1.05 1.09 1.27
Cyprus - - - - - 0.76 0.89
Latvia - - - - - 0.72 0.84
Lithuania - - - - - 0.71 0.89
Luxembourg 0.74 0.78 0.74 0.79 0.83 0.90 1.08
Hungary - - - - - 0.96 1.11
Malta - - - - - 0.87 0.89
Netherlands 1.06 1.14 1.10 1.16 1.19 1.25 1.41
Austria 0.87 0.87 0.82 0.90 0.86 0.91 1.06
Poland - - - - - 0.88 1.01
Portugal 0.80 0.91 0.86 0.95 0.95 1.00 1.20
Slovenia - - - - - 0.82 0.93
Slovakia - - - - - 0.86 0.98
Finland 1.06 1.09 1.00 1.08 1.05 1.14 1.21
Sweden 1.00 1.04 0.95 1.02 1.02 1.10 1.24
Great Britain 1.22 1.21 1.13 1.14 1.10 1.13 1.30
Source: Eurostat and Directorate-General for Energy and Transport
1,6
Without Taxes Taxes
1,4
1,2
0,8
EUR/l
0,6
0,4
0,2
0
er m
ng m
Lu un a l
a
Po d
d
La ta
C ia
Sl bli c
Sw l y
Po nd
D any
Au rg
ni Be ds
G kia
R a in
th a
Sl e ce
Es ia
s
m ry
F i ce
Ire ia
Fr n
ar
an
ni
n
G do
Li e ni
ru
H g
Ita
n
d giu
al
e
tv
u
r
xe ga
a
n
la
an
m
to
st
rtu
ua
a
ch Sp
ed
bo
yp
M
l
rl a
nl
m
re
ov
ov
ep
en
l
he
Ki
et
te
N
ze
U
Figure 3.1 Price of unleaded 95 octane gasoline in the second half of 2005
Source: Eurostat i Directorate-General for Energy and Transport
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66
Table 3.2 Excise duty in price of unleaded 95 octane gasoline (*in the first half of the year)
% 2000* 2001* 2002* 2003* 2004* 2005* 2005 (VII-XII)

Belgium 70.4 67.9 71.0 69.0 70.0 70.1 63.8
Czech Republic - - - - - 64.3 57.1
Denmark 71.9 69.9 72.7 69.5 71.0 69.3 64.6
Germany 72.6 74.8 76.9 72.7 74.6 72.7 67.2
Estonia - - - - - 58.0 48.8
Greece 59.8 56.7 58.5 55.2 56.0 67.6 47.3
Spain 63.4 61 65.3 61.4 63.4 61.5 54.0
France 73.8 72.6 76.2 72.7 75.5 73.1 66.9
Ireland 63.8 57 60.1 63.5 68.2 64.4 61.0
Italy 69.4 66.8 71.1 67.3 70.0 68.0 62.2
Cyprus - - - - - 52.7 49.4
Latvia - - - - - 50.1 50.0
Lithuania - - - - - 55.9 49.4
Luxembourg 60.9 58.3 61.3 57.9 64.2 62.1 54.6
Hungary - - - - - 65.1 62.2
Malta - - - - - 50.7 52.8
Netherlands 71.3 68.3 72.9 70.8 72.0 69.2 64.5
Austria 64.3 64.2 67.1 62.7 66.2 63.3 56.6
Poland - - - - - 64.1 59.4
Portugal 50.6 46.2 54.5 68.4 70.4 68.4 65.0
Slovenia - - - - - 66.2 55.9
Slovakia - - - - - 62.8 58.2
Finland 70.8 69.6 73.8 73.1 74.8 70.3 67.8
Sweden 71.8 68.8 72.5 70.3 71.5 69.7 66.1
Great Britain 77.5 78.4 80.4 76.0 76.7 74.6 69.2
Source: Eurostat and Directorate-General for Energy and Transport
2
Without Taxes Taxes
1,8
1,6
1,4
1,2
EUR/l
1
0,8
0,6
0,4
0,2
0
Denmark
United Kingdom
Germany
Czech Republic
Portugal
Belgium
France
Ireland
Slovakia
Finland
Poland
Greece
Luxembourg
Malta
Estonia
Italy
Hungary
Netherlands
Cyprus
Spain
Slovenia
Lithuania
Latvia
Austria
Sweden
Figure 3.2 Price of diesel fuel in the second half of 2005

Source: Eurostat i Directorate-General for Energy and Transport

67
3.3.1. Legal framework of the European Union on excise duties (special

taxes) on oil and petroleum products
The Directive 2003/96/EC of January 1st, 2004 on restructuring Community framework for the
taxation of energy products and electricity regulating the taxation (excise duties) of energy
products and electricity of the member states determines minimum tax rates for petroleum
products used as motor fuel or heating fuel, but not if used as raw materials in chemical or
metallurgical processes. It is essential to mention that the Directive 95/60/EC and the
Decision 2001/574/EC set fiscal markers for gas oil and kerosene in order to prevent tax
evasion and improve functioning of the internal market.
The goals of the Directive 2003/96/EC related to taxation of the energy sector is the
legalization of all competitive products and achieving appropriate functioning of the internal
market and other objectives in the light of the request to determine the minimum level of
taxation of most of the energy products in the Community context, given the fact that energy
prices are a key element of the Community's policies in energy, environment and
transportation.
The Directive allows member states to apply differentiated rates for commercial and non-
commercial use of gas oil as motor fuel, providing that rates on gas oil as commercial motor
fuel are not below the national taxation level that was in force on January 1st, 2003.
Differentiated rates enable member states to narrow the gap between the excise duties on
non-commercial liquid gas and those on motor vehicle oil as long as there are no ecological
or other reasons for the lower rate which is applied on gas oil used for motor vehicles.
The taxation level that member states must apply on energy products and electricity must not
be below the minimum taxation level from this Directive. Member states must harmonize their
rates with required minimum rates. The cap taxation levels are not defined and each country
may independently introduce higher rates. By January 1st, 2012 the Council should, at the
proposal of the Commission, consider the possibility of raising the minimum excise rate on
gas oil. The Directive 2003/96/EC defines the following minimum levels of taxation of motor
fuel (Table 3.3), fuel for industrial or commercial use (Table 3.4) and heating fuel or electricity
generation fuel (Table 3.5).
Table 3.3 Excise duties of motor fuel

0 Minimum excise duty
At the temperature of 15 C
From 01.01.2004 From 01.01.2010
Leaded gasoline (EUR/1,000 l) 421 421
Unleaded gasoline (EUR/1,000 l) 359 359
Gas oil (EUR/1,000 l) 302 330
Kerosene type jet fuel (EUR/1,000 l) 302 330
LPG (EUR/1,000 l) 125 125
Natural gas (EUR/GJ) 2.6 2.6
Source: Directive 2003/96/EC
Table 3.4 Excise duties on fuel for industrial and commercial use
From 01.01.2004
Gas oil (EUR/1,000 l) 21
Kerosene type jet fuel (EUR/1,000 l) 21
LPG (EUR/1,000 l) 41
Natural gas (EUR/GJ) 0.3
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68
Table 3.5 Excise duties on fuel for heating and electricity
From 01.01.2004 From 01.01.2010
Gas oil (EUR/1,000 l) 21.00 21.00
Fuel oil (EUR/1,000 kg) 15.00 15.00
Kerosene type jet fuel (EUR/1,000 l) 0.00 0.00
LPG (EUR/1,000 kg) 0.00 0.00
Natural gas (EUR/GJ) 0.15 0.30
Coal and coke (EUR/GJ) 0.15 0.30
Electricity (EUR/MWh) 0.50 1.00
Fuel for industrial and commercial use is consumed in agriculture, horticulture, fishery,
forestry, industrial plants, construction industry and public works, as well as for service SUVs
which drive off the public roads.
The reduced rate of 10 EUR/1,000 liters for heating gas oil which is allowed to member
states became effective on January 1st, 2007.
Member states apply differentiated rates only under the fiscal supervision in those cases
where they are directly connected to the product quality; where they depend on quantity of
consumed energy products and electricity for heating; for local public transport (including taxi
service), waste disposal, military forces, public administration, disabled persons, emergency
service, and where application of differentiated rates is pending on whether fuel is used in a
profit or a non-profit activity.
This Directive will not apply on taxation of heat and fuel wood and charcoal, non-fuel use of
energy products and electricity, dual use of energy products or electricity primarily used in
chemical reductions and electrolytic and metallurgical processes, electricity accounting for
more than 50% of the product's price and mineralogical processes. Taxation will not be
applied on energy products and electricity used for electricity generation, energy products
delivered as fuel for the purpose of air navigation (except for private pleasure-flying) and
energy products delivered as fuel for the need of navigation within the Community water
system, including fishing (except for private purposes). Member states may put limits to the
implementation of the two latter exemptions in the international traffic and traffic between
member states. Thus a lower than minimum taxation level may be applied on the in-country
air traffic or air traffic between two countries providing there is a bilateral agreement on the
subject.
Member states may apply these full or partial tax exemptions to energy products used in pilot
projects in the technological development of ecologically acceptable products, biofuel, solar
energy, wind, tidal waves, geothermal sources, biomass or waste, energy products or
electricity used for transport of goods and passengers on the railway, tram and bus transport,
energy products used as fuel in internal waterway navigation (including fishing) but excluding
private sport and recreational craft, and natural gas and LPG used as motor fuel.
The Directive takes into account the competition between different sectors and allows for the
application of measures for reducing gaps in taxation burdens between energy intensive
sectors and/or those sectors which pursue environmental protection objectives or contribute
to improving efficiency in energy product use.
In the member states it is also possible for business entities investing in efficient use of
energy to achieve partial or full tax return. The energy intensive sector may be granted a
100-percent tax return while other sectors may enjoy a return of up to 50 percent.
For those countries where there is a significant gap between national rates and minimum
required rates a transitional period is approved during which they must gradually reduce the
gap. In the countries where this difference does not exceed 3% the rates will be adjusted
only after the transitional period.

69
3.4. Comparison of price setting in BIH, Croatia and the EU

Prices of petroleum products may be set by laws of individual states or under the so called
free regime, where the market forces determine the basic prices of petroleum products.
The basic difference between Bosnia and Herzegovina and the EU countries concerning
retail process of specific petroleum products is in the ratio between excise and tax level, and
net price. This ratio in the EU countries is in favor of levies paid to the state while in BIH the
levies are much lower. Moreover, in most countries the petroleum product prices include the
cost of building the so called compulsory stocks as well. One of the essential differences is in
the fact that in the EU countries the level of excise duties is not related to the type of
petroleum products but to its actual use. It is important to emphasize that excise duties for
diesel fuel and light fuel oil are the same in Bosnia and Herzegovina, which is not the case in
other countries (Figure 3.3). From that reason light fuel oil cannot, in terms of price, compete
with solid fuel, which forces the subjects with already installed equipment for use of light fuel
oil (industry, service sector, households) to switch to other energy products (wood or coal).
Since in the forthcoming period the gas network is supposed to be extended, it could again
mean exchange from solid fuel to gas. Such double exchange in use of energy products in
relatively short period is not economical at all, so therefore we suggest reduction of excise
duties for light fuel oil.
The petroleum products imported in Bosnia and Herzegovina are chargeable with tariffs,
except when petroleum products are imported from the countries with which BIH has free
trade agreements. In the EU countries, custom duties on petroleum products are also
charged on most parts of the import (from Saudi Arabia, Libya, Russia and some OECD
member countries including USA and Canada).
0,35
Diesel oil Light fuel oil 0,30
0,30
0,27
0,25
0,20
EUR/l
0,15 0,15
0,15 0,14
0,12
0,10
0,04
0,05 0,02
0,00
BIH Croatia Montenegro EU
Figure 3.3 Comparison of excise of diesel oil and light fuel oil in selected countries
Source: EIHP
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70
1,5
1,4 WITHOUT TAXES TAXES
1,3
1,2
1,1
1
0,9
EUR/l
0,8
0,7
0,6
0,5
0,4
0,3
0,2
0,1
0
BIH CROATIA MONTENEGRO ITALY AUSTRIA GERMANY
Figure 3.4 Comparison of average net prices and retail prices of motor gasoline BMB95 in
selected countries (November 2007)
Source: Gas Vehicles Report, September 2007
1,5
1,4
WITHOUT TAXES TAXES
1,3
1,2
1,1
1
0,9
EUR/l
0,8
0,7
0,6
0,5
0,4
0,3
0,2
0,1
0
BIH CROATIA MONTENEGRO ITALY AUSTRIA GERMANY
Figure 3.5 Comparison of average net prices and retail prices of Eurodiesel in selected
countries (November 2007)
Source: Gas Vehicles Report, September 2007
Figures 3.4 and 3.5 present the comparison of gross retail price and price excluding excise
duties and VAT for motor gasoline BMB95 and Eurodiesel fuel. The diagram shows that the
portion of excise duties and VAT is much higher in the west European countries than in BIH,
Croatia and Montenegro. It is also evident that so called net price is somewhat higher than in
other countries. This leads to the conclusion that, regardless of the large number of market
participants, the competition itself is not sufficient for achieving the lowest possible price for
the final customer. The existence of a large number of service stations in Bosnia and
Herzegovina only adds to this situation since their rather low average sale levels lead to
higher margins. Decision on free price setting, which is currently in use, has not resulted in

71
decrease of retail prices of derivates, since the costs of derivates purchasing and retail costs
(mark-up) are still too high.
Taking into account the described situation and with the view of achieving as low retail prices
of petroleum products as possible, it is recommended to legally regulate the prices using the
models applied in other countries, i.e., by defining all the costs that traders may include in the
retail price of each specific type of petroleum product. Regulation of retail prices of petroleum
products by indexing mechanism based on price changes on the world market and the
exchange rate for USD is recommended as transition phase till introduction of total
liberalization.
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4. REGULATORY FRAMEWORK

73
4.1. Quality of liquid petrol products

Due to increasing economic and political integrations especially on the European continent,
there are growing efforts to harmonize the norms and regulations in different economic
areas. This is particularly visible in the issues of quality and protection of the environment,
which has a great influence on the status and development of the oil industry. Meeting the
current and especially the future fuel quality requirements is a basic prerequisite for any
company’s market survival.
4.1.1. Legislation on the quality of fuels in the EU
Legislation framework for regulating the quality of fuels in the EU consists of the Directives,
legal acts requiring from member states to accomplish certain targets but it does not impose
conditions regarding the instruments for achieving such targets or results. Below are listed, in
order of adoption, the Directives concerning the quality of motor fuels in the EU countries.
Gasoline:
• Directive 78/611/EEC limits the lead content of petrol to 0.4 g/l,
• Directive 85/210/EEC limits the lead content of petrol to 0.15 g/l and introduces
unleaded motor gasoline,
• Directive 85/536/EEC regulates oxygenate supplements,
• Directive 87/416/EEC bans lead in regular gasoline.
Diesel / gas oils:

• Directive 75/716/EEC limits the sulfur content in gas oil to 0.5% from October 1976
i.e., 0.3% from October 1980,
• Directive 93/12/EEC limits the sulfur content in diesel fuel to 0.2% from October
1994 i.e., 0.05% from October 1996,
• Directive 1999/32/EC (amending Directive 93/12/EEC) limits the sulfur content in
gas oil/ marine gas oil to 0.2% from July 2000 and 0.1% from January 2008,
• Directive 2005/33/EC (amending directive 1999/32/EEC) limits the sulfur content in
marine gas oil to 0.1% from January 2010,
The basic requirements for advanced definition of the quality of motor fuels are determined
under the following Directives:
• Directive 98/70/EC limits the sulfur content in unleaded motor gasoline to 150 / 50
mg/kg, and in diesel fuels to 350 / 50 mg/kg starting from January 1st , 2000 and
January 1st , 2005 respectively,
• Directive 2000/71/EC is adjustment of Article 10 of the Directive 98/70/EC
concerning measuring methods,
• Directive 2003/17/EC (amending Directive 98/70/EC) limits the sulfur content in
unleaded motor gasoline and diesel fuel to 10 mg/kg from January 1st , 2009.
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4.1.2. Legal regulation on the quality of fuels in Croatia
Pursuant to the Law on Environmental Protection (Official Gazette HR 82/1994 and

128/1999) and the Law on Protection of Air (Official Gazette HR 178/2004), the quality of
liquid petroleum fuels is regulated under the relevant Regulation. The Regulation on quality
of liquid petroleum fuels that is currently in force was adopted on May 15th, 2006. It lays down
the EURO IV/V quality requirements for unleaded gasoline and diesel fuel and the
requirements referring to gas oils, fuel oils, maritime fuels and kerosene. The Regulation
sets out the limit values for sulfur content in motor gasoline and diesel fuel, set to 50 mg/kg
until 31.12.2008, or, 10 mg/kg starting from 01.01.2009. In 2008 suppliers will have to place
on the domestic market, evenly distributed in the whole territory of Croatia, motor gasoline
and diesel fuel with sulfur content not higher than 10 mg/kg, as prescribed under the
Program of placing motor gasoline and diesel fuel on the domestic market, enforced by the
Ministry responsible for energy. Also, the Croatian Government sets out the allowed annual
quantities of liquid petroleum fuels placed on the domestic market, which do not meet limit
values and other quality requirements for liquid petroleum fuels.
It this view it is obvious that Croatia plans to gradually introduce on the market the Euro
quality fuels and to adjust its regulations with those of the EU. In addition, the trend in
modernization of motor fund also requires ever higher shares of Euro quality fuels which
necessarily bring the need for streamlining refinery capacities not only in Croatia but in other
countries in the region as well.
4.1.3. Legal regulation on quality of fuels in Bosnia and Herzegovina
Where fuels are concerned, Bosnia and Herzegovina inherited the Yugoslav regulations and
standards referred to as JUS standards which had a legal force. They are standards for 98-
octane premium motor gasoline under the brand name MB-98, regular 86-octane motor
gasoline MB-86, and premium 95-octane motor gasoline MB-95. These regulations allowed
the lead content in MB-98 and MB-86 of up to 0.6 g/l, sulfur content in MB-98 and MB-86 of
up to 0.1% m/m, sulfur content in diesel fuel up to 1% m/m, while benzene content was not
covered by the regulations. Faced with the new fuel quality requirements and standards in
Europe and the world, Bosnia and Herzegovina's Institute for Standards, Measurements and
Patents founded in early 1998 the Technical Committee BAS/TC 11 dealing with the issues
regarding oil and petroleum products. During 1999, BAS/TC 11 prepared the first two fuel
quality standards in Bosnia and Herzegovina:
• BAS EN 228 referring to unleaded gasoline, identical to the European standard EN
228:1993 prepared by the European Technical Committee CEN/TC 19.
• BAS EN 590 referring to diesel fuel, identical to the European standard EN
590:1993 prepared by CEN/TC 19.
Before 2002 liquid fuels had the same treatment when imported as any other commodity.
This means that the quality control was carried out on the basis of entry documentation and
only randomly at the request of the inspection authorities. On September 23rd, 2002 the
Council of Ministers of Bosnia and Herzegovina made the Decision on required quality of
liquid fuels (OG BIH 27/02) which was amended in the following years (OG BIH 28/03, 28/04,
16/05, 14/06 and 19/07), laying down the quality requirements to be met by liquid fuels used
in internal combustion engines and for direct heat energy generation in the territory of Bosnia
and Herzegovina. Also, the standards for the physical-chemical properties of liquid petroleum
products were set out, as well as limit values of basic characteristics of fuels, procedure and
methods of testing these properties and marking and compliance verification.
The limit values are maximum allowed contents of total sulfur, lead, all aromatics, benzene,
polychloride biphenyls and minimum and maximum values of other quality characteristics of
liquid fuels, such as: oxidation stability, research octane number, motor octane number,
filterability point, flow point, ignition point, distillation range, cetane index, cetane number,

75
marking agents, density at 15 °C, water, color, etc. The Decision applies to unleaded motor
gasoline, leaded motor gasoline, kerosene for heating and lighting, diesel fuel and heating
gas oil (extra light, light special, medium, and heavy).
Unleaded motor gasoline is subject to the BAS EN 228 standard, while the fuel produced in
Bosnia and Herzegovina is exempted from this regulation until 30.06.2010. (OG BIH 19/07).
The limit values are: for benzene 5% v/v and for total aromatic hydrocarbons 45% v/v. On
leaded motor gasoline the BAS Standard 1001 is applied but the leaded motor gasoline
produced in BIH is exempted from this provision until December 31st, 2009. (OG BIH 19/07).
The limit values of total sulfur for this fuel are 0.1% m/m and lead 0.6 g/l. For kerosene for
heating and lighting the set limit values of total sulfur content are 004% m/m and total
aromatics 18% m/m. Fuels for diesel engines are subject to the BAS EN 590 standard, but
this does not apply to the fuels produced until June 30th, 2008 (OG BIH 19/07) but limit
values of total sulfur of 1.0% m/m and water content up to 500 mg/kg must be complied with.
The quality of extra light heating gas oil is subject to the BAS 1002 standard, but fuel
produced in BIH is exempted from this provision until June 30th, 2008 (OG BIH 19/07), and
limit values of sulfur are set to 1.0% m/m and limit value of water content to 500 mg/kg. Fuel
oils are subject to the BAS 1002 standard, and fuel oil medium produced in BIH is exempted
until June 30th, 2010 and for them the limit value of total sulfur is set to 3.0% m/m (OG BIH
19/07).
Legal persons have an obligation to ensure the implementation of the quality compliance
procedures for all types of liquid fuels placed on the market. The procedure of establishing if
the liquid fuels comply with quality standards is carried out at least once a year on the basis
of the Program of the Entities' Ministries responsible for energy. The Program lays down the
scope of monitoring the quality of liquid fuels and the sampling procedure. All the suppliers
involved in the Program are obliged to provide a mandatory and minimum number of
samples of all types of fuel. The scope of monitoring, i.e., sampling frequency for individual
liquid fuel suppliers, is determined proportionally to their share in sale of specific liquid fuel in
the preceding year. It is set to 150 samples for diesel, unleaded motor gasoline, and
superplus gasoline each, with 30 samples per season for each fuel, which makes a total of
480 samples. All suppliers with their own organized sale stocks in BIH have to provide 90
samples per season while those suppliers who do not hold the organized stocks but procure
fuel in a direct delivery system, have to provide one sample per 300 cubic meters of fuel. The
sampling of extra light heating gas oils is carried out either in the supplier's stock or at site of
final use, taking one sample per 100 tons of fuel. For quality control of medium and heavy oil
one sample per 500 tons is taken. In the summer period the monitoring is carried out
between May 1st and September 30th, and in the winter period between October 1st and April
30th .
The Decision determines the minimum number of quality reports by fuel types - for diesel
fuel: color, density (at 15oC) at open air, distillation start-up - 50% predistilled, 250oC, 348oC,
370oC – end, cetane index/number, kinematic viscosity at 40o C, cloud point, CFPP; ignition
point, copper strip corrosion, coke residual (from 10% v/v), sulfur, water content, ash content,
micro pollution content; for extra light heating gas oil: markers' presence, density (at 15oC) at
open air, color, distillation start-up 350oC, kinematic viscosity at 20oC, flow point, ignition
point, copper strip corrosion, coke residual (from 10% v/v), sulfur, water content, ash content,
heat power, content of micro pollution; for motor gasoline: appearance, density (at 15o C) in
air, research octane number, motor octane number, distillation start-up - 700, 100oC, 180oC –
end point, residual, loss, vapor pressure, evaporability index, copper strip corrosion,
oxygenates content, benzene content, aromatics content, olefins content, lead content, and
sulfur content.
Assessment of quality compliance is carried out by inspection bodies by use of testing
laboratories. Inspection bodies must meet the following conditions for such an appointment:
to be a legal or natural person registered for the activity concerned, to have a seat in BIH, be
a holder of the A inspection accreditation by the Accreditation Institute of BIH. In other words,
the requirements of the BAS ISO/IEC 17020:2000 standard must be met. Laboratories have
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76
to hold accreditation by the Accreditation Institute of BIH and to meet the BAS EN ISO/IEC
17025:2000 requirements. The Decision determines penalties imposed on the suppliers as
legal persons and on their responsible persons. The penalties are financial ones, but after
the third recurred negative finding the working license is revoked. The inspectors of the
Ministries responsible for energy monitor the implementation of the Decision in both Entities.
4.1.4. Summary of regulatory framework for the quality of fuels in the

EU, Croatia and Bosnia and Herzegovina
Legal regulation concerning quality of liquid fuels of the European Union, Croatia and Bosnia
and Herzegovina was particularly observed. Croatia has fully harmonized its legislation with
the respective EU Directives and the Croatian Government determines on an annual basis
the quantities of liquid petroleum fuels that are allowed be placed on the domestic market
without having to meet the limit values and other quality requirements as set out in the
respective Regulation. Bosnia and Herzegovina has laid down quality standards for liquid
petroleum fuels which are also harmonized with EU standards. However, the fuels produced
in Bosnia and Herzegovina may in a given period of time diverge from the EU standards.
4.2. Safety and protection of environment

Safety and environmental protection are critical factors in the oil industry primarily because of
large quantities of crude oil and oil products concentrated on a relatively small area.
Moreover, they are inflammable and/or explosive liquids and gases, and as such they not
only affect the environment but also impose potential threat to equipment and staff or
population in the vicinity of oil installations. Due to this, some countries regulate by laws all
the activities related to the environmental protection in the oil industry. In addition to legal
regulations, it is necessary to follow and implement the latest achievements in the field with
the intent of accident prevention.
There are four main factors which must be considered where environmental protection in the
oil industry is concerned:
• Air pollutant emissions,
• Water pollutant emissions,
• Waste management,
• Safety and risk management.
Industrial production has a significant role in the overall environmental pollution in Europe.
This particularly applies to the emission of greenhouse gases, waste waters and waste
generation. Due to this, the EU brought a set of rules in order to regulate and control
activities of the industrial installations which affect the environment. This set of rules is
referred to as IPPC (Integrated Pollution Prevention Control) Directive 96/61/EC. The aim of
the Directive is to minimize pollutions from different industrial sources throughout the
European Union and define obligations of each individual operator (industrial plant) to obtain
a permit in accordance with the IPPC Directive. The final deadline for all installations to fully
comply with all requirements of the Directive is October 30th, 2007. The IPPC Directive is
based on several fundamental principles being integrated approach, BAT (best available
techniques and technologies), flexibility and participation of the public.
1. Integrated approach implies that the overall environmental performance of an

installation is considered, which includes emissions into the air, water and soil, waste
generation, raw materials used, energy efficiency, noise, and accident prevention.
The goal of the Directive is to ensure a high level of overall protection of environment.

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2. An environmental permit includes putting limit values on emission based on the so

called Best Available Techniques (BAT). BAT determines the emission values for
each individual industry pending on the applied technological process. BAT also gives
recommendations for emission reduction for each technological process or
installation.
3. The IPPC Directive contains the elements of flexibility in issuance of environmental
permits and takes into account the following:
• Technical characteristics of the installations,

• Geographical location, and
• Local environment conditions.
4. The Directive ensures the right of the public to participate in the decision making
process and the right to information on effects of these decisions through the
following:
• Issuance of an environmental permit in accordance with public opinion,
• Information about results of emission monitoring, and
• Access to the European Pollutant Emission Registry, ensuring environmental
information in relation to major industrial activities.
The IPPC Directive 96/61/EC was amended with Directives 2003/35/EC, 2003/87/EC,
Regulations no. 1882/2003 and 166/2006.
The Constitution of Bosnia and Herzegovina defines the environmental issues as
responsibilities of the Entities, Federation of Bosnia and Herzegovina, Republic of Srpska
and the Brčko District.
In the Federation BIH the responsibility is divided between the Ministry of Environment and
Tourism, which brings legal framework and is responsible for environmental issues of the
whole entity, and cantonal ministries responsible for environmental management at the local
and cantonal level. Water management, protection and use of water are the responsibility of
the Ministry of Agriculture, Waters and Forestry, while physical planning falls under the
responsibility of the Federal Ministry of Physical Planning.
In the Republic of Srpska environmental issues in the whole entity is the responsibility of
the Ministry of Physical Planning, Construction, and Ecology. Water management, protection
and use of water are the responsibility of the Ministry of Agriculture, Forestry and Waters.
In the Brčko District, environmental issues fall under the competence of the District's
Assembly.
4.2.1. Air pollutant emissions
In the EU air pollutant emissions from the oil industry activities are regulated by the following
Directives:
• Directive 96/61/EC on Integrated Pollution Prevention Control (IPPC),
• Directive 94/63/EC on the control of volatile organic compound (VOC) emissions
resulting from the storage of petrol and its distribution from terminals to service
stations,
• Directive 84/360/EC on the combating of air pollution from industrial plants
• Directive 2000/69/EC on limit values for benzene and carbon monoxide in the
ambient.
In Croatia the Law on Protection of Air (Official Gazette HR 178/2004) lays down the
measures, organization, implementation, and monitoring of protection and improvement of air
quality. It is a fundamental law in this field. The Decree on limit values of air pollutants from
stationary sources (Official Gazette HR 21/2007) sets out the limit values concerned as well
as permitted exceeding of limit values for certain periods of time. Stationary sources include
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installations, technological processes, industrial plants, activities, apparatus, establishments,
and surfaces from which pollutants are discharged into the air. It also refers to the point
sources and diffuse sources.
In accordance with the EU Directive on the control of volatile organic compound emissions
resulting from the storage and distribution of petroleum products from terminals to service
stations (94/63/EC), Croatia brought, on December 13th, 2006, the Regulation on technical
standards of environmental protection from emissions of volatile organic compounds
resulting from storage and distribution of gasoline (Official Gazette HR 135/2006). Since the
organic compound emissions resulting from storage of oil and petroleum products
significantly contribute to total emissions related to the oil sector, we shall describe in more
detail the requirements of the Regulation. It lays down the following criteria that must be
fulfilled in carrying out the mentioned activity:
1. Outside walls and roofs of the reservoirs placed above ground must be painted using
a dye that reflects 70% of total heat radiation. The quality of dye coating on gasoline
storage facilities should undergo check up every three years.
2. Reservoirs with an outside floating cover must have a double seal. The first seal
closes a ring-shaped space between the reservoir wall and the outer edge of the
floating cover, and the second one closes the space above the first seal. The seals
must be designed in a way to be able to retain 95% or more of storage-lost steam in
the same reservoir with a fixed roof and vacuum-pressurized relief valve, and without
a steam retaining unit.
3. New reservoirs for gasoline storage on terminals for which a steam recovery unit
must be used (in accordance with technical requirements of environmental protection
for charging and discharging on terminals under Articles 7 and 10 of the Regulation)
should either:
• have an outside or inside floating cover and a double seal retaining 95% or
more of steam lost in storage in the same reservoir a with fixed roof and should
not be equipped with a steam loss control unit (only a vacuum-pressurized relief
valve), or,
• be reservoirs with a fixed roof connected to a steam recovery unit which meets
requirements for charging and discharging units on terminals.
4. The existing reservoirs with fixed roofs should be:
• Connected to a steam recovery unit which meets requirements for charging
and discharging units on terminals, or,
• With an inside floating cover with a single seal retaining 90% or more of steam
lost in storage in the same reservoir with a fixed roof not equipped with steam
loss control units.
The obligation to connect to a steam recovery unit does not apply to reservoirs with fixed
roofs in which the transitory storage of recovered steam is allowed. This Regulation defines
gasoline as a petroleum product, with or without additives, with evaporation pressures of
27.6 kPa or more, intended for use as a motor vehicle fuel, except for liquid oil gas and
petroleum gas.
In Bosnia and Herzegovina the protection of the air is regulated by appropriate laws at the
entity level and the Brčko District level.
In the Federation of BIH the Law on Environmental Protection (OG FBIH 33/03) regulates
the conservation, protection, revitalization and improvement of the ecological qualities and
capacities of the environment. It also defines the measures and institutions of conservation,
protection and activity funding and operations and tasks of the authorities. The Law on
Protection of the Air (OG FBIH 33/03) determines the measures for prevention or reducing
emissions into the air, planning of the air quality protection, defines the emission cadastre, air
quality and monitoring and finally, the penalties. The Law was the basis for the Rules for limit
values of air polluting substances (OG FBIH 12/05) regulating the limit values of the air

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emissions, for inorganic pollutants, carcinogenic pollutants and organic pollutants. The Rules
for monitoring air pollutant emissions (OG FBIH 12/05) is another document which derives
from the mentioned Law. The Rules regulate the obligations of operators to check or monitor
emissions of polluters into the air. The aim of checking and monitoring of emissions is to
verify that an installation meets the limit values set out by the Rules on limit values of air
polluting substances or within the environmental permit. The limit values of air pollutant
emissions from fossil fuel combustion installations are set out by the Rules on limit values of
emissions into the air from combustion installations (OG FBIH 12/05). The Rules are not
harmonized with the EU Directive 2001/80/EC on combating air pollution from large
combustion plants since it does not include plants of thermal input exceeding 50 MW t.
In the Republic of Srpska the Law on Environmental Protection is in force (Official Bulletin
RS 53/02), and, like the Federation's Law on Environmental Protection, it regulates the
conservation, protection, revitalization, and improvement of the quality and capacity of the
environment, measures and conditions for management and rational use of natural
resources, financing of activities, etc. The Law on Protection of the Air (OB RS 53/02)
regulates the protection of the air from pollution with the aim to protect human health, the
climate and environment from the harmful influence of polluted air. The Law is the basis for
the Rules for the limit values of pollutant emissions into the air (OB RS 39/05). The Rules set
the limit values of the air pollutants: inorganic pollutants, carcinogenic pollutants and organic
pollutants. The Rules for monitoring the air pollutant emissions (OB RS 39/05) was also
adopted on the basis of the Law and it determines the obligation of responsible persons to
check and monitor air pollutant emissions from installations, stationary sources, types of
installations whose emissions should be checked, polluting substances, sampling
methodology, etc. The checking and monitoring emissions are carried out with the aim to
verify that installations meet the limit values set out by the Rules or by their environmental
permit. The limit values of air pollutant emissions from fossil fuel combustion installations are
set out by the Rules on limit values of emissions into the air from combustion installations
(OB RS, 39/05). The Rules are not harmonized with the EU Directive 2001/80/EC on
combating air pollution from large combustion plants because it does not include plants of
thermal input above 50 MW t.
In the Brčko District the Law on Protection of Air is in force (Official Bulletin BD 25/04),
which regulates the protection of the air against pollution with the aim to protect human
health, the climate and environment. In order to achieve the goals of air protection, the
strategy and action plan of quality air management as well as the reporting on fulfilling plans
and programs are defined. The Mayor prescribes the limit values and the methods of air
pollutant monitoring on a regular basis, sampling procedure, measuring air parameters, and
monitoring the changes in the air quality and their effect on human health and the
environment.
4.2.2. Pollutant emissions into water
In the EU countries water protection is regulated by the following Directives:

- Directive 96/61/EC concerning Integrated Pollution Prevention Control (IPPC), which as
already explained, lays down the rules for the activities related to environmental impacts of
industrial installations,
- Directive 2000/60/EC which established the framework for water protection policy, and it
includes inland surface waters, underground waters and coastal waters, as well as the their
pollution prevention and reduction. The Directive is amended by the Regulation
2455/2001/EC which determines priority substances essential for water protection. It includes
33 substances or group of substances among which are anthracene, benzene, cadmium,
naphthalene, etc.
In Croatia the Law on Waters (Official Gazette HR 107/1995) regulates the legal status of
waters and water assets, ways and conditions for water management, organization and
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performance of activities and tasks of water management, authorities, responsibilities and
other relevant issues. The water protection is carried out in accordance with the National
Plan and County Plans for the protection of waters, which determines necessary
investigations and testing of water quality, measures for water protection including measures
for emergency situations, pollution incidents and other matters. Water management
regulation acts issued in accordance with the Law on Water Protection lay down the
conditions that must be fulfilled in the construction documentation for new facilities and
reconstruction of the existing facilities (installations), grant permission for the use of waters
and determine the purpose, method, conditions, and scope of utilization and discharge of
purified and non-purified waters, hazardous and other substances with potential to pollute
waters.
In Bosnia and Herzegovina the following basic laws regulating water protection are in force:
• Law on Waters (OG F BIH, 70/06) in force in the Federation BIH,
• Law on Waters (OB RS 50/06) in force in the Republic of Srpska and
• Law on Water Protection (OB BD 25/04, 1/05) in force in the Brčko District.
These Laws regulate the method of water management, utilization of waters, protection from
hazardous activities and water flow regulation, with the aim to reduce water pollution,
achieve viable water utilization, protect ecological systems, reduce the risk of floods, and
deal with other issues of water protection.
4.2.3. Waste management
The oil industry, including oil processing, storage and transport of oil and petroleum products,
is a source of certain quantities of waste of various categories (deposits in tanks,
hydrocarbon water emulsions, etc.). This waste must be appropriately disposed of.
In the European Union the Directive 2006/12/EC on waste sets out measures for combating
or reducing waste generation, method of waste collection and disposal, payment of
compensations for generated waste and other issues relevant for waste management. The
waste catalogue contains the list of waste substances and is prescribed on the basis of the
2000/532/EC Regulation and amendments 2001/118/EC, 2001/119/EC and 2001/573/EC.
The IPPC Directive 96/61/EC, as explained above, in the frame of the set of rules regulating
the overall activities in relation to the impact of industrial installations on the environment,
addresses the issue of waste as well. The Directive 75/439/EEC regulates the disposal of
waste oils and is applied on all mineral oils for lubrication which do not meet the original
need. This Directive is amended with Directives 1987/101/EEC, 91/692/EEC and
2000/76/EC.
In Croatia waste management is regulated under the Law on Waste (Official Gazette HR
178/2004, 111/2006). Waste is classified in accordance with the Regulation on categories,
types and classification of waste with a catalogue and list of hazardous waste (Official
Gazette HR 50/2005). The Rules for waste management (Official Gazette HR 23/2007) lay
down the procedures of use and disposal of waste, categories and technical and
technological conditions that waste storage buildings must meet, required qualifications of
the staff dealing with waste, way of keeping records and delivering data regarding waste
management. Waste must be processed, used and/or disposed of in a way that does not put
human health at risk, with an application of procedures that do not affect the environment or
minimize environmental effects. The principles of best industrial practice have an important
role in dealing with waste and thus should be recognized and complied with.

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In Bosnia and Herzegovina the following laws regulating waste management are in force:
In Federation of Bosnia and Herzegovina they are:
• Law on Waste Management (OG FBIH 33/03),
• Rules on waste categories (OG FBIH 9/05),
• Regulation on waste permit (OG FBIH 31/06),
• Regulation on selective collection, packaging, and marking of waste (OG FBIH
38/06).
In the Republic of Srpska they are:

• Law on Waste Management (OB RS 53/02),
• Rules on waste categories with a Catalogue (OB RS, 39/05),
• Rules of waste types and licensed waste management activities (OB RS, 39/05),
• Rules on waste categories, characteristics of classifying hazardous waste, activities
of return of the components of waste disposal.(OB RS, 39/05).
In the Brčko District, waste management is regulated under the:

• Law on Waste Management (Official Bulletin BD 25/04, 1/05).
The Law on Waste Management represents the framework which sets out the principles of
waste management in all waste categories, including waste generated in exploration of
resources, extraction, treatment and exploitation of mineral raw materials and stone-pit
operations, liquid and other waste. The Law does not apply to radioactive waste, gases
discharged in the atmosphere and waste waters.
4.2.4. Safety and risk management
One of the most important aspects of environmental protection is the influence of incidents
on installations for processing, storage, overhaul and transport of oil and petroleum products.
Thus, it is necessary to make an in-depth assessment of risks for each individual installation
or unit.
In the European Union a set of laws is in force dealing with the safety aspects and
emergency measures in the event of an accident. General provisions referring to
interventions in accidents and civil protection programs, preventive measures are given in
Decision 2001/792/EC on mechanisms to facilitate reinforced cooperation in civil protection
assistance interventions and Decision 1999/847/EC establishing Community action program
in the field of civil protection. Directive 96/82/EC on the control of major-accident hazards
involving dangerous substances introduces new requirements referring to safety
management system, emergency intervention plans and public information.
In Croatia the Plan for environmental protection interventions (Official Gazette HR 82/99,
86/99, 12/01) determines the categories of risks and hazards, procedures and measures for
mitigating and eliminating immediate adverse effects on the environment, entities performing
specific measures, responsibilities and authorities in relation to implementation and the
methods of harmonization with other emergency measures performed under other laws. The
Plan is based on the following principles defined in the Law on Environmental Protection:
• prevention,
• integrated approach,
• payment for pollution incurred costs,
• legal compliance,
• public information and participation.
The Law on Environmental Protection determines the responsibility of the counties, towns
and municipalities to define the program for environmental protection and determine
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measures for forecasting, prevention and limiting accidental pollution and the way of
implementation of emergency measures. Accordingly, under the Environmental Contingency
Plan (Official Gazette HR 82/1999), legal and natural persons producing, storing, processing,
transporting, collecting or carrying out other activities involving oil and petroleum products,
must prepare operational emergency plans for environmental protection if the production,
storing, processing, transport, collecting or other activities bear any potential of leakage in
the environment from installations, reservoirs, or means of transport, in a quantity larger than
or equal to 0.1% of limit value of the concerned hazardous substance (for gasoline and other
fuels this value is 500 kg).
The Environmental Contingency Plan (Official Gazette HR 82/1999) is applied on the whole
territory of Croatia, except for the areas which are covered by the Intervention plan in
maritime pollution incidents in the Republic of Croatia (Official Gazette HR 8/97) and National
Plan for protection of waters (Official Gazette HR 8/99).
The National Plan for protection of waters includes necessary investigations and testing of
quality of waters, categorization of waters, water protection measures, emergency
interventions in case of water accidental pollution and a list of natural and legal persons
responsible for implementation of the plan, their authorities and duties. Under the National
Water Protection Plan all natural and legal persons are obliged to define operational plan for
implementation of measures for control and elimination of accidental pollution. The
operational plan must contain:
• implementation of the operational plan,
• ways, instruments and assessment of possible causes, scope, and danger from
accidental pollution, and preventive measures for accidental pollution,
• assessment of risks of accidental water pollution,
• organization of procedures, scope and method of implementing measures in the
event of accidental pollution,
• responsible persons and required expert staff in implementation of measures,
• equipment and means for implementation of measures,
• need for participation of other natural and legal persons in implementing necessary
measures,
• a training program for the staff and experts for implementation of measures,
• a program for accidental pollution information verification.
The construction of establishments and installations for keeping, storing, and trade of
inflammable liquids and gases must meet the requirements set out by the Law on
Inflammable Liquids and Gases (Official Gazette HR 108/95) and the Rules for inflammable
liquids and gases (Official Gazette HR 54/99) which are based on the above Law. These acts
lay down conditions for storing inflammable liquids and gases and the principles for
implementing fire and explosion protection measures in construction and utilization of the
establishments and installations.
Strategic documents of Bosnia and Herzegovina, addressing the safety and environmental
protection issues are:
• Environmental Action Plan, and
• Strategy for environmental protection.
The Environmental Action Plan of Bosnia and Herzegovina was prepared in 2003 and
adopted by the Governments and Assemblies of both Entities. Its aim is to identify short- and
long-term priority activities and create the basis for preparation of long-term strategy for
environmental protection in accordance with economic development of Bosnia and
Herzegovina.
The Strategy for environmental protection is being prepared at the entity level. The
Federation's Strategy consists of: Federal strategy for environmental protection, Federal
strategy for air protection, Federal strategy for waste management and Federal strategy for
water management. The preparation of the Federal Environmental Strategy commenced in
2006 under the Federal Ministry of Agriculture, Water Management and Forestry in
cooperation with the Federal Ministry of Environment and Tourism.

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The Republic of Srpska has also begun to develop the Strategy for environmental protection
and Strategy for air protection, which are basic documents for environmental strategy of the
Republic of Srpska. The preparation of these documents is coordinated by the Ministry for
Spatial Planning, Construction and Ecology.
In order to reduce the environmental impact of the oil sector as much as possible, it is
necessary to permanently observe and implement the industry’s emerging technologies and
provide regular training for the personnel involved. Good maintenance practice of the overall
equipment, starting from machinery, operational systems, measuring and regulation
equipment and electric equipment are prerequisite for the elimination of potential accidents
and of the effects that might arise out of them. Moreover, comprehensive action plans and
the Strategy for environmental protection are the basis for preventing or mitigating negative
effects on the environment.
4.2.5. Summary of the environmental regulatory framework in the EU,

Croatia and Bosnia and Herzegovina
In the European Union the industry related to environmental protection is based on the
Directive 96/61/EC concerning Integrated Pollution Prevention Control (IPPC) and the
environmental permit the installations should obtain in accordance with this Directive. In
addition to the IPPC Directive, there is a number of Directives addressing particular aspects
of the environment. Croatia is in the process of harmonizing its legislation with that of the EU.
In this regard, the most that could have has been achieved in the air protection and waste
management issues while the harmonization of other issues is still pending. In Bosnia and
Herzegovina the environmental protection is regulated at the level of Entities or the Brčko
District through the laws dealing with each particular aspect of the environment. Very
important legal acts regulating the obtaining of the so called environmental permit are the
Rules for plants and installations applying to the environmental impact assessment in
required units and installations. These required units and installations may be constructed
and put in operation only if they have the environmental permit (OG F BIH 19/04). The Rules
also apply to the Regulation on installations, which can be built and operated only if they too
have the environmental permit (OB RS 7/06). The more detailed analysis of particular laws
and by-laws in domain of environment protection, as well as the comparison with EU
legislation, is given in Module 13, chapter 2.
4.3. Compulsory stocks of oil and petroleum products

The storing of oil and petroleum products has an important role in securing the stability of
supply in the present situation where a large number of countries depend on imported oil.
Therefore, the companies involved in the oil industry permanently develop and expand their
operations. In addition to construction of new storing terminals, increasing importance is
given to the development of new supply routes, both pipelines and tanker routes.
The European Union set out the obligation of maintaining 90 day stocks of oil and petroleum
products for the purpose of securing the supply for critical installations and for being able to
adequately respond to any external or internal disturbances in supply. Compulsory stocks
management is a key element of the emergency response systems. The new EU members
as well as the countries in the process of accession to the European Union undertook the
obligation to build compulsory stocks of oil and petroleum products as one of the principal
tasks of secure energy supply.
For the purpose of defining the compulsory stocks system it is necessary to make a detailed
analysis of the storage capacities in Bosnia and Herzegovina, of the relevant legal
regulations and the analysis of historical and future consumption of petroleum products. This
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should enable a forecast of the future situation on the storage facility market and estimate
the needed investments in the new storage capacities.
4.3.1. Regulative framework of the EU countries regarding compulsory

stocks of oil and petroleum products
Maintaining compulsory stocks of oil and petroleum products in the EU member states is
regulated under the Directive 68/414/EEC adopted in 1968. The member states are bound to
include this Directive in their respective national legislation in order to ensure a secure and
uninterrupted supply of petroleum products. The Directive 72/425/EEC sets out the marginal
levels for compulsory stocks equal to a 90 day average internal consumption and increased
the margin from 15 to 25 percent within which the petroleum products produced in the
country can make a part in the compulsory stocks (Directive 98/93/EC).
The member states that are not able to accrue stocks in their own territory may do it in a
territory of other member states, on the basis of inter-governmental agreements. Since such
agreements have not been achieved in a reasonable period of time, the Directive
68/416/EEC was enforced, prescribing that, if such necessity arises, members states are
obliged to apply inter-governmental agreements and should notify the European Commission
about eventual difficulties in concluding such agreements in a specified period of time.
The Directive strictly defines the method of accounting for the quantities of crude oil and
semi-final products to be maintained as compulsory stocks. The exact quantity of compulsory
stocks of a country is calculated on the basis of internal consumption in the preceding
calendar year, at the beginning of each calendar year (as set out in Directive 98/93/EC), and
not later than March 31st of the current year. In calculating the average internal consumption
the following petroleum products are taken into account: (I) motor gasoline, jet fuel of the
gasoline type and jet gasoline, (II) gas oil, diesel fuel, kerosene and jet fuel of the kerosene
type, and (III) fuel oils. The stocks may be kept in the form of crude oil, semi-final products or
final petroleum products. At the end of each month the member states must send the
Commission the statistical report on current stocks, specifying the number of days of the
average consumption in the preceding calendar year that they cover. The statistical report
must include the calculations based on their actual tonnage, while crude oil and semi-final
products are accounted for in one of the three following ways: in proportion of quantities for
each category of product obtained during the preceding calendar year from refineries in a
particular state; on the basis of the refineries' production program for the current year; or on
the basis of ratio between the total quantity manufactured during the preceding year of
products covered by the obligation to maintain stocks and the total amount of crude oil used
during that year; the foregoing shall apply to not more than 40 % (the previous 10% was
replaced by the Directive 98/93/EC) of the total obligation for the first and second categories
and to not more than 50 % for the third category (fuel oils). The statistical reports separately
show the stocks of jet fuel of kerosene type in the second category. The Directive
68/414/EEC determines the stocks that may be included in the compulsory stocks, such as:
supplies on board oil tankers in ports for the purpose of discharging, once the port formalities
have been completed, supplies held in ports of discharge, supplies held in tanks at the entry
to oil pipelines and product pipelines; supplies held in refinery tanks excluding those supplies
in pipes and refining plants; supplies held in storage by refineries and by importing, storage
or wholesale distribution firms; supplies held in storage by large-scale consumers in
compliance with the provisions of national law concerning the obligation to maintain
permanent stocks; supplies held in barges and coasting-vessels engaging in transport within
national frontiers, in so far as it is possible for competent authorities to keep a check on such
supplies and provided that the supplies could be made available immediately. The statistical
reporting will exclude: crude oil not yet produced; supplies intended for the bunkers of sea-
going vessels; supplies in direct transit apart from the stocks held in other member states;
supplies in pipelines, in road tankers and rail tank wagons; in the storage tanks of distributing

85
stations, and those held by small consumers; quantities held by the armed forces and those
held for them by the oil companies.
The Directive 73/238/EEC sets the obligation of member states to invest the relevant
agencies with necessary power to take necessary measures in situations of difficulties or
interruptions in supply of oil or petroleum products. This includes include the release of the
compulsory stocks of oil and petroleum products, measures for limiting consumption
(depending of level of emergency) or giving priority to specific groups of consumers, and
implement the price regulation as a way of preventing their abrupt increase. The member
states must inform the Commission about the undertaken measures.
The Directive 77/706/EEC on the setting of targets for a reduction in the consumption of
primary sources of energy in the event of difficulties in the supply of crude oil and petroleum
products prescribes that in the event of such occurrences in one or more member states the
Commission may set up targets for reducing consumption by 10% of normal consumption.
Such a decision may be in force for a maximum of two months.
The Directive 98/93/EC prescribes that in order to meet their obligations, the member states
may establish an independent body (storage operator) to be responsible for stockholding of
all or part of stocks, and one or more member states may decide to establish a joint
stockholding body (storage operator).
Given the fact that today each member state has its own method and conditions for
stockholding of compulsory stocks of oil and petroleum products, the Proposal of the new
directive (COM (2002) 488) introduces the obligation for all member states to establish a
public body responsible for oil and petroleum product stockholding. This body would have its
own stocks in quantities equal to a minimum of one third of total 120-day average
consumption. The Proposal elaborates the obligation of maintaining stocks and criteria that
compulsory stocks system must meet. It also deals with measures for ensuring coordinated
anti-crisis response.
4.3.2. IEA oil and petroleum product compulsory stocks system
At the Copenhagen summit in December 1973, held amid the ongoing oil crisis, the EU
member states established that the “reliable and uninterrupted supply of energy under
economically satisfactory (acceptable) conditions” was not possible in the situation of high
dependency on oil imports from a limited number of sources. Thus a need was emphasized
for developing a strategy for diversifying the routes and sources of supply, even if this implied
higher expenses.
As a result, on November 15th, 1974 the International Energy Agency (IEA) was established
and three days later the Agreement on an International Energy Program (IEP) was signed.
The IEP's main objectives were defined as:
• Development of a common level of independence in oil supplies,
• Development of common measures for reducing demand for oil and petroleum
products in the event of a crisis,
• Development and implementation of measures for re-allocating available oil supplies
in the event of a crisis,
• Development and implementation of long-term common programs for reducing
dependence on imported oil, such as energy efficiency and alternative energy
sources programs, research and development in energy and natural gas and
enriched uranium supply,
• Development of cooperation with oil producing countries and other oil consuming
countries, especially with developing countries.
The introduced IEA arrangements for the re-allocation of oil supplies in the event of a crisis,
together with restraining demand measures and a supporting information gathering system,
make the so called IEA Emergency Sharing System. This system consists of a stand-by
emergency response of measures and rules. Although flexible, this system is designed
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primarily for acting in the event of serious disruptions of supply, which imply actual or
imminent supply shortages i.e., when supplies are reduced by 7 percent to the total
consumption level of IEA countries as a group.
As from January 1980 the IEA members have the obligation to hold compulsory stocks in the
quantity of at least 90 days of the net oil and petroleum products import in the preceding
year. The stockholding obligation may be met through:
• Oil stockholding,
• Fuel-switching out of oil capacities,
• Stand-by production capacities.
The oil stocks can be held in (among others) refineries' tanks, oil terminals, tanks at the entry
to product pipelines, barges and coasting-tankers but not maritime tankers, berthed tankers,
or river ships' bunkers. On the other hand, crude oil not yet produced is not accounted for as
a part of compulsory stocks (unlike the EU system which enables the lowering of required
compulsory stocks for a certain number of days of average consumption on account of own
oil production). Also, it is not possible to account for refinery products or semi-final products
held in product pipelines, rail tanks wagons and road tankers, sea tankers, service stations or
stocks that belong to the armed forces.
If a country member holds crude oil or petroleum products in (stable) tanks it must include
10-percent reduction of available compulsory stocks in the accounting of total stocks
because these quantities are considered as unpumpable. Namely, the connection of mains
to refinery tanks is placed 0.5 meters above the bottom level of the liquid in the tank and it is
necessary to apply specific measures in order to empty the tank to the end, which is rarely or
only exceptionally done.
As already mentioned, the obligation to hold stocks can be met by holding capacities (on the
demand side) which in an emergency event can switch to other fuels. The portion of such
capacities is defined as a number of days of normal (average) oil (and petroleum products)
consumption, which can be replaced by other fuels in case of emergency. The condition is
that such capacity must be accessible for the control by the authorities and organized in such
a way to be made operable within one month and that the alternative fuels are secured.
4.3.3. Legal framework for stockholding of oil and petroleum products in

Croatia
In the Republic if Croatia, in the frame of the EU accession process, the Law on Market of Oil
and Petroleum Products (Official Gazette HR 57/2006) regulates the storage of oil and
petroleum products. The Law differentiates the operational (commercial) and compulsory
stocks of oil and petroleum products. Operational stocks of oil and petroleum products are
accrued in order to ensure stability and security of the oil processing and treatment and of
heat and electricity production for the market and for the customers requiring a particular
level of security and quality of supply. The compulsory stocks of oil and petroleum products
are built in order to ensure supply of oil and petroleum products in the events of supply
disruption. In line with the EU legislation, the Law on Market of Oil and Petrol Products
(Official Gazette HR 57/2006) determines the obligation to secure stocks of oil and petroleum
products in quantities equal to a 90 day average consumption of petroleum products in the
preceding calendar year, not later that July 31st. of the current year. The compulsory stocks
include three groups of petroleum products: (I) motor gasoline and aircraft gasoline, (II)
diesel fuels, gas oils and jet engine fuels and (III) fuel (light, medium, and heavy) oils. A part
of compulsory stocks can be held in the form of crude oil and semi-final products but not
more than 40% for groups I and II, and up to 50% for group III. The Government can lower
the level of compulsory stocks by 25% at most on account of domestic petroleum product
productions from crude oil produced in the territory of Croatia. The Law also regulates the
strategic material stocks which are built for contingency supply during the state of war or in
the event of imminent danger for independence, unity and existence of the Republic of

87
Croatia, or in the event of large-scale natural disasters or serious technological and

ecological incidents.
Based on the Law on Market of Oil and Petroleum Products (Official Gazette HR 57/2006)
the Croatian Agency for compulsory stocks of oil and petroleum products was established
and given the obligation of securing compulsory stocks. The Agency carries out the activities
and operations defined by the Law, such as collecting fees for compulsory stocks of oil and
petroleum products, purchase and sale of oil and petroleum products for the purpose of
building and replenishing the stocks, compulsory stock structuring, monitoring, and
management, appropriate use of funds for building and storing compulsory stocks and
determining conditions for storing compulsory stocks. It also undertakes purchases and
building and operating the tanks and auxiliary installations, monitors the quantity and quality
of oil, petroleum products and industry related services. Under the Rules for general
conditions and tariffs for storing compulsory stocks of oil and petroleum products (Official
Gazette HR 68/2003) the Agency may keep its own energy products with storage operators
with whom it concluded a storage agreement. The storage operators ensure that storage
facilities are operated and function in a safe and technically appropriate manner. Their
obligation is to prepare and send the required supporting documentation. The Agency pays
the storage operator on the basis of tariffs set out as part of the above mentioned Rules. The
Agency can keep the compulsory stocks in Croatia or abroad, in the countries with which
Croatia has bilateral agreements on stockholding compulsory stocks of oil and petroleum
products.
4.3.4. Legal framework for stockholding oil and petroleum products in

Bosnia and Herzegovina
At present the Republic of Bosnia and Herzegovina does not have the legislation in place
which regulates compulsory stocks of oil and petroleum products, but in the context of the
global oil market situation it is in the interest of Bosnia and Herzegovina to start establishing
the stocks in the near future. The first steps were taken in late 2005 by issuing Consent for
conclusion of agreement to share transfer free of charge to the Enterprise for stockholding of
liquid fuels Terminal Sarajevo-Ilidža, between the Federation of Bosnia and Herzegovina,
and the Enterprise for stockholding of liquid fuels Terminali Federacije Sarajevo (OG FBIH
718/05).
Final Report
88
5. ANALYSIS OF COMPULSORY STOCKS OF OIL AND
PETROLEUM PRODUCT SYSTEMS

89
Oil supply is of paramount importance for the entire world economy and consequently for the
economy of individual countries. For decades oil has been the most important commodity in
the international trade and largely influences the political and economic relations between the
countries. The 1973/74 oil crisis highlighted the role oil plays in the national economies and
was a motive for the creation of associations and organizations with the task to control
adverse effects of oil supply shortages. One of them is the International Energy Agency
(IEA), which today gathers 26 member countries.
In the countries with stockholding obligation (members of the EU and IEA) there are different
forms of stockholding organization. In some countries the stockholding obligations lie with the
entities carrying out production, transportation and trade of oil and petroleum products, while
in other ones, this obligation lies with the special agencies. The latter may either keep all
strategic stock in their own facilities or partly in the own storing facilities and partly in the
leased ones. However they are responsible for overall stock management.
For the purpose of better understanding of the issue of stockholding of oil and petroleum
products, it is necessary to explain the meaning of the following relevant terms.
Operational stocks – are stocks accrued in order to ensure stability and security of the
technological process of processing and treatment of oil and petroleum products, heat and
electricity generation for the market and for customers requiring special security and quality
of supply.
Compulsory stocks – are stocks accrued in order to ensure oil and petroleum product supply
in the event of threat to national energy security, due to disruption in oil supply.
Strategic stocks– are stocks accrued in order to ensure basic supply in the state of war or in
the event of large-scale natural disasters or technological and ecological incidents.
The regulation of the oil and petroleum product compulsory stocks systems is determined by
a country’s membership in a specific organization or by national legal regulations. The
compulsory stocks system defines the way of stock building, holding, replenishing and
operation. If necessary, other measures can be set out in the time of supply disruptions, such
as demand restrain, giving priority to certain categories of consumers, etc.
The issue of material stocks in Bosnia and Herzegovina is regulated by the laws at the entity
levels. Practically, where oil and petroleum products stocks are concerned, especially the
Entities’ compulsory stocks or companies’ commercial stocks, they are minimal or even non
existing.
The existence of significant storage capacities, i.e., terminals, allows for a relatively quick
establishment of compulsory stocks of oil and petroleum products. The Yugoslav strategy of
allocating petroleum products through material stocks system contributed to the construction
of considerable storage capacities in this area.
The largest storage capacities are those in the Bosanski Brod Oil Refinery. The Refinery’s
current storage capacities amount to 473,291 cubic meters, out of which 79,231 cubic meters
are allocated for crude oil storage, and the remainder for petroleum products or final
products.
The second largest storage capacity is Energopetrol’s terminal in Ploče with the capacity of
84,000 cubic meters. In addition there are other terminals of different capacities. (Table 5.1)
In the Brčko District, the companies involved in trade and distribution of petroleum products
have storage capacities of 10,000 cubic meters.
A certain number of terminals are owned by the Ministries of Defense – Čelebić, Dretelj,
Misoča near Ilijaš and Vardište near Višegrad, while other terminals have different owners.
Terminals Vrbanja and Brezičani make part of Petrol Banja Luka, while the companies
Krajinapetrol Banja Luka and HOLDINA Sarajevo have their own terminals.
The Government of the Federation of Bosnia and Herzegovina adopted the decision on
establishing a company for storing liquid fuels called Terminali Federacije which will include
all terminals formerly belonging to the Energopetrol Sarajevo Company (Blažuj, Mostar,
Živinice).
Final Report
90
Table 5.1 Storage capacities in the Federation of BIH and the Republic of Srpska
Federation of BIH Republic of Srpska
3 3
Energopetrol – Ploče 84,000 m Oil Refinery Bosanski Brod 473,291 m
3 3
Blažuj 42,000 m Vrbanja 20,900 m
3 3
Živinice 17,700 m Brezičani 17,600 m
3 3
Mostar 37,000 m Krajinapetrol Banja Luka 4,600 m
3 3
Bihać 18,100 m Vardište – Višegrad 3,500 m
3 3
Podlugovi 15,000 m Smaller terminals 10,000 m
3
Dretelj 22,600 m
3
Čelebić 10,000 m
3
Zovko – Žepče 5,000 m
3
Misoča – Ilijaš 27,000 m
Source: Ministry of Energy, Mining and Industry (F BIH) [104]
5.1. Compulsory stocks system in selected EU member states and

the Republic of Croatia
The countries obliged to keep compulsory stocks of oil (members of EU and IEA) apply
different forms of stockholding organization. In some countries, compulsory stocks are held
by companies involved in production, transportation, and trade of oil and petroleum products.
In other ones, such companies hold compulsory and commercial stocks combined. In some
countries this is the responsibility of agencies, handling stocks that are stored integrally or
partially in their own or leased storing capacities.
For example, in the United Kingdom the stocks are held by oil companies because it is
believed that they have better knowledge of logistics and supply chains. In case of need to
activate the stocks, they are better used if located in places where required, i.e., in refineries
(crude oil) and distribution terminals (oil, petroleum products) from where the stocks can be
quickly fed into the supply system. A centralized stockholding system generally requires
more time to deliver stocks into a supply system and often oil or petroleum products must be
transported at large distances from the point of storing to the point where contingency
occurs. Additionally, it is the oil companies' own interest to maintain high quality stocks as to
keep the processing and operational costs as low as possible. The subjects handling the oil
stocks should be experts in the field of oil with good insight and knowledge of the market
developments.
In Austria entire stocks are kept by the Erdöl-Lagergesellschaft GmbH (ELG) Company at
market-based tariffs for storing oil and petroleum products (Table 5.2), but the highest annual
amount of tariffs is set out by the Ministry of Economy and Labor. The Company is focused
on storing crude oil in order to avoid eventual legal changes related to the quality of
petroleum products and changes in consumption structure.
Table 5.2 Tariffs for oil and petroleum products storing at ELG Company
EUR/t per month Tariff for oil storing

Group 1 3.46
ELG (Austria) Group 2 3.54
Group 3 2.50
Crude oil 2.96
Source: /http://www.elg.at/
In Hungary in 1993 the agency for compulsory stocks of oil and petroleum products was
established - KKKsZ- Kőolaj és Kőolajtermék Készletező Szövetség. It started to function
when the Law on Oil and Petroleum Product Stockholding Obligation was adopted with the
view to ensure supplies. The state-controlled KKKsZ agency is financed from the fees paid
by oil and petroleum product importers by each ton of imported commodity, which is included

91
in the retail price of petroleum products (Table 5.3). In order to carry out projects of
developing new storage capacities and meeting stockholding obligations, several daughter
companies were set up in which KKKsZ acquired ownership shares ranging from 26% to
33% and were given a possibility to purchase remaining shares.
Slovenian Agency for Compulsory Oil Stocks (ZORD Slovenija) was established in mid-1999
as a public powers entity. Up until the end of 2002 Slovenia adopted the EU acquis
communautaire and took the obligation to form 60 day stocks by the end of 2002, 66 day
stocks by the end of 2003, 75-day stocks by the end of 2004, and 90 day stocks by the end
of 2005. ZORD Slovenija covers a part of compulsory stocks by its own reserves, and
quantities that are not procured because of high oil prices, lack of storage capacity or
restrictive domestic financial policy are provided by means of the so called ticketed stocks.
These stocks are owned by a company which makes the obligation on paper to make them
available to ZORD Slovenija at any one moment it may be required. ZORD Slovenija may
also request that these stock quantities are sold to it. The price of ticketing is agreed upon on
the market basis (Table 5.3).
Table 5.3 Annual fees for financing oil and petroleum product stockholding obligation by
selected agencies
EUR/t per year Annual fee

Category I 15.89
Category II 14.13
KKKsZ (Hungary)
Category III 11.87
Crude oil 14.13
Category I 11.89
ZORD (Slovenia) Category II 10.37
Category III 10.37
Category I 20.49
HANDA (Croatia) Category II 20.49
Category III 20.49
Source: http://www.kkksz.hu/, http://www.zord.org/, [51]
In Croatia the Law on oil and petroleum products market (Official Gazette HR 57/06) set up
the Croatian Oil and Petroleum Products Compulsory Stocks Agency (HANDA) which is a
stockholding obligation entity. In the transitional period, energy entities which before the Law
had entered into force were obliged to maintain oil and petroleum product stocks (legal and
natural persons who in the preceding calendar year imported at least 25 tons of oil and
petroleum products) under this Law are obliged to keep the compulsory stocks of oil and
petroleum products by August 1st, 2001, and they will be decreased in accordance with the
dynamics set up by the Law. HANDA is obliged to gradually set up compulsory stocks at the
level of 90 day average consumption before July 31st, 2012. All costs related to compulsory
stockholding are financed through fees paid by oil and petroleum product importers and
traders in the amount of 150 Kn by ton of petroleum products traded on the domestic market
(Table 5.3).
Final Report
92
5.2. Analysis of compulsory stocks of oil and petroleum products
of BIH in the period until 2020 in the view of the EU legislation
The estimate of strategic stock quantity is a prerogative of the state, while operational stocks
are estimated by the companies carrying out trade, processing and production of oil and
petroleum products. The quantities of compulsory stocks in the European Union and the
countries in the accession process are most often set to 90 day average consumption level
of the individual country.
As to form the basis for the calculation of oil and petroleum product compulsory stocks it was
necessary to study the current structure of petroleum product consumption and to develop a
demand forecast for the period until 2020. On the basis of the analysis of the base year, by
use of MAED methodology, demand forecasts until 2020 are made in three scenarios.
Scenario S2 is defined as the referent energy demand scenario (S2-reference) and it
presumes high gross domestic product and, consequently the highest energy demand. S3 is
the energy demand scenario which includes consumption reduction measures and it
presumes more extensive use of renewable energy sources and energy efficiency measures
(S3-sustainable). S1 is the scenario with relatively slow growth of GDP and the lowest
energy demand (S1-low growth).
Calculation of compulsory stocks according to the EU Directives for the period until 2020 and
of required investments in storage capacities are given in Tables below. They refer to the
referent scenario (S2). The calculation of necessary stocks and volume of storage capacities
for the other two scenarios are shown in Annexes 1 and 2.
The aggregated consumption by categories of petroleum products falling under the
compulsory stock obligation is given in the Table below. There is also an account of the 90
day average consumption in Bosnia and Herzegovina (Table 5.5).
Table 5.4 Total demand for petroleum products in the Republic of Bosnia and Herzegovina
tons 2005 2010 2015 2020
Motor gasoline 269,800 310,500 338,782 364,778
Diesel oil 513,400 668,877 841,750 1,029,782
Kerosene type jet fuel 5,300 6,713 8,458 10,559
Light fuel oil 110,476 162,750 199,828 178,010
Fuel oil 118,800 194,922 278,361 359,067
Total 1,017,776 1,343,762 1,667,179 1,942,196
Table 5.5 Average 90 day consumption of petroleum products in the Republic of Bosnia and
Herzegovina
tons 2005 2010 2015 2020
Motor gasoline 66,526 76,562 83,535 89,945
Diesel oil 126,592 164,929 207,555 253,919
Light fuel oil 27,241 40,130 49,273 43,893
Fuel oil 29,293 48,063 68,637 88,537
Total 250,958 331,339 411,085 478,898

93
Below are the results of the accounting of needed storage volume, assuming the following
specific weight of crude oil and petroleum products:
• motor gasoline: 0.760 kg/l
• jet fuel: 0.760 kg/l
• diesel fuel: 0.845 kg/l
• extra light fuel oil 0.845 kg/l
• crude oil 0.820 kg/l
• fuel oil 0.860 kg/l
The needed volume of the storage space, based on these assumptions, is given below.
Table 5.6 Needed volume of storage capacity for compulsory stocks of petroleum products
(BIH)
3
m 2005 2010 2015 2020
Motor gasoline 87,534 100,739 109,915 118,349
Diesel oil 149,813 195,182 245,627 300,496
Light fuel oil 32,237 47,491 58,311 51,944
Fuel oil 34,062 55,887 79,810 102,950
Total 305,366 401,477 496,407 577,165
According to Directive 98/93/EC the petroleum products of category I and II can be replaced
in the amount of up to 40 %, and the petroleum products of category III in the amount of up
to 50 %, accounted on the basis of the share of crude oil in the production of specific
petroleum products in the refineries of the member states, on the basis of the situation in the
preceding year or on the basis on the refineries' production programs in the current year.
Assuming the increase in production of the Bosanski Brod Oil Refinery, such an amount of
substitution would be feasible. The advantage of storing crude oil instead of petroleum
products is in lower storing costs, and in the event of a crisis it is possible to more promptly
and adequately adjust the production structure to meet the demand. For implementation of
the mentioned substitution, Table 5.7 gives the shares of individual petroleum products in the
structure of crude oil processing in the Bosanski Brod Oil Refinery.
Table 5.7 Shares of petroleum products in the structure of crude oil processing
% Share Category
Motor gasoline 17.33 I
Diesel oil + Light fuel oil 37.22 II
Kerosene type jet fuel 1.32 II
Fuel oil 21.23 III
Other 22.9
The needed crude oil quantities substituting the shares of petroleum products are optimized
in a way that the needed quantities of diesel fuels are produced. Namely, if the optimization
is oriented towards motor gasoline, a shortage of diesel fuels will occur. Table 5.8 shows the
quantities of petroleum products which can be substituted by crude oil and Table 5.9 shows
the quantity of crude oil (optimized for diesel fuel) needed for the production of these
petroleum products.
Table 5.8 Quantities of petroleum products substituted by crude oil ( BIH)
tons 2005 2010 2015 2020
Motor gasoline 26,610 30,625 33,414 35,978
Diesel oil + Light fuel oil 61,533 82,023 102,731 119,125
Kerosene type jet fuel 523 662 834 1,041
Fuel oil 14,647 24,031 34,318 44,269
Total 103,313 137,342 171,298 200,413
Final Report
94
Table 5.9 Needed quantity of crude oil for production of substituted share of petroleum
products given the structure of refinery’s processing (BIH)
tons 2005 2010 2015 2020
Quantity of crude oil 165,322 220,375 276,010 320,056
Motor gasoline 28,650 38,191 47,833 55,466
Fuel oil 35,098 46,786 58,597 67,948
Tables 5.10 and 5.11 show the quantities of needed crude oil and petroleum product stocks
under the EU regulations and needed storage capacities for stocking them.
Table 5.10 Needed stocks of crude oil and petroleum products by use of substitutes (BIH)
tons 2005 2010 2015 2020
Motor gasoline 39,916 45,937 50,121 53,967
Kerosene type jet fuel 784 993 1,251 1,562
Fuel oil 14,647 24,031 34,318 44,269
Crude oil 165,322 220,375 276,010 320,056
Total 312,968 414,372 515,798 598,540
Table 5.11 Needed volume of storage space with maximum substitution of petroleum products
by crude oil (BIH)
3
m 2005 2010 2015 2020
Motor gasoline 52,521 60,443 65,949 71,009
Fuel oil 17,031 27,944 39,905 51,475
Crude oil 201,613 268,750 336,598 390,312
Total 381,426 504,047 626,461 726,316
5.2.1. Investments in storage capacities for oil and petroleum product

compulsory stocks of the Republic of Bosnia and Herzegovina
Investments in storage capacities for compulsory stocks are envisaged in a way that the
storage capacities would be developed successively, i.e., in 2010 investments will be made
in one third of the storage capacities required in that year, and in 2015 investments will be
made in the remaining capacities which will be required in 2020. The volume of required
reservoirs for each type of petroleum products are rounded to 100 or 1,000 m3 pending on
total reservoir volume. The investment in construction of oil and petroleum product terminals
is calculated on the basis of 250 EUR per m3 of storage volume which includes, in addition to
reservoirs, all necessary infrastructure and work on project design.

95
Table 5.12 Planned dynamics of developing storage capacities for oil and petroleum product
compulsory stocks (BIH)
3
m 2010 2015 Total
Motor gasoline 21,500 53,300 74,800
Diesel oil + Light fuel oil 51,000 163,000 214,000
Kerosene type jet fuel 600 1,700 2,300
Fuel oil 10,100 45,200 55,300
Crude oil 91,600 305,300 396,900
Total 174,800 568,500 743,300
Table 5.13 Investments in storage capacities for oil and petroleum product compulsory stocks
(BIH)
EUR 2010 2015 Total
Motor gasoline 5,375,000 13,325,000 18,700,000
Diesel oil + Light fuel oil 12,750,000 40,750,000 53,500,000
Kerosene type jet fuel 150,000 425,000 575,000
Fuel oil 2,525,000 11,300,000 13,825,000
Crude oil 22,900,000 76,325,000 99,225,000
Total 43,700,000 142,125,000 185,825,000

of the Federation of BIH for the period until 2020 in the view of
the EU legislation
The tables below describe: consumption of petroleum products subject to compulsory stock
obligation, compulsory stocks accounted in accordance with the EU regulations and
necessary storage capacities in the Federation of Bosnia and Herzegovina.
Table 5.14 Total demand for petroleum products in the Federation of Bosnia and Herzegovina
tons 2005 2010 2015 2020
Motor gasoline 167,600 195,690 214,610 230,800
Diesel oil 331,000 421,558 538,658 664,909
Light fuel oil 68,800 88,400 116,730 126,390
Fuel oil 14,900 13,230 14,680 15,610
Total 586,800 724,660 892,050 1,047,017
Table 5.15 Average 90 day consumption of petroleum products in the Federation of Bosnia and
Herzegovina
tons 2005 2010 2015 2020
Motor gasoline 41,326 48,252 52,918 56,910
Diesel oil 81,616 103,946 132,820 163,950
Light fuel oil 16,964 21,797 28,783 31,165
Fuel oil 3,674 3,262 3,620 3,849
Total 144,690 178,683 219,958 258,169
Final Report
96
Table 5.16 Needed volume of storage capacities for stocking compulsory stocks of petroleum
products (Federation of BIH)
3
m 2005 2010 2015 2020
Motor gasoline 54,376 63,490 69,628 74,881
Diesel oil 96,588 136,771 174,763 215,724
Light fuel oil 20,076 25,796 34,062 36,881
Fuel oil 4,272 3,793 4,209 4,476
Total 176,772 231,537 284,814 334,678
Table 5.17 Quantity of petroleum products substituted by crude oil (Federation of BIH)
tons 2005 2010 2015 2020
Motor gasoline 16,530 19,301 21,167 22,764
Kerosene type jet fuel 444 570 727 918
Fuel oil 1,837 1,631 1,810 1,925
Total 58,244 71,800 88,345 103,652
products given the structure of refinery’s processing (Federation of BIH)
tons 2005 2010 2015 2020
Motor gasoline 18,360 23,419 30,097 36,339
Fuel oil 22,492 28,689 36,871 44,517
Table 5.19 Needed stocks of crude oil and petroleum products by use of substitution
(Federation of BIH)
tons 2005 2010 2015 2020
Motor gasoline 24,796 28,951 31,751 34,146
Fuel oil 1,837 1,631 1,810 1,925
Crude oil 105,944 135,135 173,673 209,688
Total 192,391 242,019 305,285 364,204
Table 5.20 Needed volume of storage space with implementation of maximum petroleum
product substitution by crude oil (Federation of BIH)
3
m 2005 2010 2015 2020
Motor gasoline 32,626 38,094 41,777 44,929
Kerosene type jet fuel 876 1,126 1,435 1,812
Fuel oil 2,136 1,897 2,104 2,238
Crude oil 129,200 164,799 211,796 255,717
Total 234,836 295,200 371,860 443,239

97

compulsory stocks of the Federation of Bosnia and Herzegovina
compulsory stocks (Federation of BIH)
3
m 2010 2015 Total
Motor gasoline 13,000 35,000 48,000
Kerosene type jet fuel 500 1,500 2,000
Fuel oil 1,000 5,000 6,000
Crude oil 55,000 205,000 260,000
Total 99,500 356,500 456,000
(Federation of BIH)
3
m 2010 2015 Total
Motor gasoline 3,250,000 8,750,000 12,000,000
Fuel oil 250,000 1,250,000 1,500,000
Crude oil 13,750,000 51,250,000 65,000,000
Total 24,875,000 89,125,000 114,000,000

of the Republic of Srpska for the period until 2020 in the view of
the EU legislation
The following Tables give the consumption of petroleum products subject to compulsory
stock obligation; compulsory stocks accounted according to the EU regulations and needed
storage capacities for the Republic of Srpska.
Table 5.23 Total demand for petroleum products in the Republic of Srpska
tons 2005 2010 2015 2020
Motor gasoline 96,800 108,470 116,754 125,210
Diesel oil 172,900 235,179 288,100 346,979
Light fuel oil 39,476 71,790 80,240 48,430
Fuel oil 102,500 180,260 261,950 341,470
Total 412,476 596,630 748,130 863,340
Final Report
98
Table 5.24 Average 90 day consumption of petroleum products in the Republic of Srpska
tons 2005 2010 2015 2020
Motor gasoline 23,868 26,746 28,789 30,874
Diesel oil 42,633 57,989 71,038 85,556
Light fuel oil 9,734 17,702 19,785 11,942
Fuel oil 25,274 44,448 64,590 84,198
Total 101,706 147,114 184,470 212,878
products (RS)
3
m 2005 2010 2015 2020
Motor gasoline 31,406 35,192 37,880 40,623
Diesel oil 50,453 76,302 93,472 112,574
Light fuel oil 11,519 20,949 23,414 14,132
Fuel oil 29,388 51,683 75,105 97,905
Total 123,026 184,398 230,188 265,600
Table 5.26 Quantity of petroleum products substituted by crude oil (RS)

tons 2005 2010 2015 2020
Motor gasoline 9,547 10,698 11,515 12,349
Fuel oil 12,637 22,224 32,295 42,099
Total 43,210 63,291 80,247 93,571
products given the structure of refinery’s processing (RS)
tons 2005 2010 2015 2020
Motor gasoline 9,753 14,097 16,915 18,158
Fuel oil 11,948 17,269 20,722 22,245
Table 5.28 Needed stocks of crude oil and petroleum products by use of substitution (RS)
tons 2005 2010 2015 2020
Motor gasoline 14,321 16,048 17,273 18,524
Fuel oil 12,637 22,224 32,295 42,099
Crude oil 56,278 81,344 97,607 104,780
Total 114,774 165,168 201,830 224,088

99
product substitution by crude oil (RS)
3
m 2005 2010 2015 2020
Motor gasoline 18,844 21,115 22,728 24,374
Fuel oil 14,694 25,842 37,553 48,952
Crude oil 68,632 99,201 119,033 127,781
Total 139,509 200,084 244,015 270,580

compulsory stocks of the Republic of Srpska
compulsory stocks (RS)
3
m 2010 2015 Total
Motor gasoline 8,000 17,000 25,000
Kerosene type jet fuel 100 200 300
Fuel oil 9,000 40,000 49,000
Crude oil 35,000 95,000 130,000
Total 72,100 202,200 274,300
(RS)
EUR 2010 2015 Total
Motor gasoline 2,000,000 4,250,000 6,250,000
Fuel oil 2,250,000 10,000,000 12,250,000
Crude oil 8,750,000 23,750,000 32,500,000
Total 18,025,000 50,550,000 68,575,000
Final Report
100
of the Brčko District for the period until 2020 in the view of the
EU legislation
The following Tables give the consumption of petroleum products subject to compulsory
stock obligation; compulsory stocks accounted according to the EU regulations and needed
storage capacities for the Brčko District.
Table 5.32 Total demand of petroleum products in Brčko District

tons 2005 2010 2015 2020
Motor gasoline 5,400 6,340 7,418 8,768
Diesel oil 9,500 12,140 14,992 17,894
Light fuel oil 2,200 2,560 2,858 3,190
Fuel oil 1,400 1,432 1,731 1,987
Total 18,500 22,472 26,999 31,839
Table 5.33 Average 90 day consumption of petroleum products in Brčko District

tons 2005 2010 2015 2020
Motor gasoline 1,332 1,563 1,829 2,162
Diesel oil 2,342 2,993 3,697 4,412
Light fuel oil 542 631 705 787
Fuel oil 345 353 427 490
Total 4,562 5,541 6,657 7,851
products (BD)
3
m 2005 2010 2015 2020
Motor gasoline 1,752 2,057 2,407 2,845
Diesel oil 2,772 3,939 4,864 5,806
Fuel oil 401 410 496 570
Total 5,568 7,153 8,601 10,151
Table 5.35 Quantity of petroleum products substituted by crude oil (BD)

tons 2005 2010 2015 2020
Motor gasoline 533 625 732 865
Fuel oil 173 176 213 245
Total 1,859 2,252 2,706 3,189

101
products given the structure of refinery’s processing (BD)
tons 2005 2010 2015 2020
Fuel oil 658 827 1,004 1,186
Table 5.37 Needed stocks of crude oil and petroleum products by use of substitution (BD)
tons 2005 2010 2015 2020
Motor gasoline 799 938 1,097 1,297
Fuel oil 173 176 213 245
Crude oil 3,100 3,895 4,730 5,587
Total 5,803 7,185 8,682 10,249
product substitution by crude oil (BD)
3
m 2005 2010 2015 2020
Motor gasoline 1,051 1,234 1,444 1,707
Fuel oil 201 205 248 285
Crude oil 3,781 4,750 5,768 6,814
Total 7,081 8,764 10,586 12,497

compulsory stocks of the Brčko District
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compulsory stocks (BD)
3
m 2010 2015 Total
Motor gasoline 500 1,300 1,800
Fuel oil 100 200 300
Crude oil 1,600 5,300 6,900
Total 3,200 9,800 13,000
(BD)
EUR 2010 2015 Total
Motor gasoline 125,000 325,000 450,000
Diesel oil + Light fuel oil 250,000 750,000 1,000,000
Fuel oil 25,000 50,000 75,000
Crude oil 400,000 1,325,000 1,725,000
Total 800,000 2,450,000 3,250,000
5.6. Recommendations for establishing a compulsory stocks

system
Given the importance of the security of supply of petroleum products for the normal
functioning of any state it is recommended that Bosnia and Herzegovina sets up a
compulsory stocks system on the model of the EU member states. In addition, compulsory
stockholding of petroleum products is one of the essential topics in negotiations about EU
accession, and new members are granted a transitional period during which they have to set
up appropriate quantities of compulsory stocks. Therefore, the sooner Bosnia and
Herzegovina starts to shape the compulsory stocks system the sooner it will be in the
position to reach the required quantity levels of compulsory stocks and will be able to provide
necessary levels of petroleum products in case of supply disruptions as to ensure normal
performance of economic and energy activities.
On the basis of experience of the countries with long stockholding practice, it is
recommended to establish an agency for compulsory stocks. The agency would be financed
from storage fees which would be paid by producers and importers of petroleum products
and would be included in the retail price. Since such obligation would increase the present
price of petroleum products this is another reason for necessary interference of the state in
the methods of setting retail prices for petroleum products and reduction of margins. Since
the issue of compulsory stocks is an international obligation (on the EU level), we would
suggests to form Agency for compulsory stocks on the level of BIH state, for the purpose of
monitoring, building and management of compulsory stocks, with offices and storage
capacities (according to share in total consumption) in both entities.

103
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104
6. REFINERY CAPACITIES IN THE REGION

105
The Bosanski Brod Oil Refinery is located in the north of Bosnia and Herzegovina, near its
border to Croatia and is the only oil refinery in Bosnia and Herzegovina. The refineries in the
region, which may influence the operation of the Bosanski Brod Refinery, are the following:
• the Sisak Oil Refinery in Croatia,
• the Rijeka Oil Refinery in Croatia,
• the Pančevo Oil Refinery in Serbia, and
• the Novi Sad Oil Refinery in Serbia.
In order to determine the real market position of the Bosanski Brod Refinery it is necessary to
analyze and compare it with other regional oil refineries noting available capacities, current
product quality level, potential supply area, required amount of investments and term
investment plans for the modernization of the refinery.
6.1. Bosanski Brod Oil Refinery

The refinery has two oil processing lines, with total capacities of 4,320,000 tons a year. The
old line, with the processing capacity of 2 million tons a year, started operation in 1968.
Today it can process 1,320,000 tons of crude oil annually. The new line, which was
completed in 1991, has the installed capacity of 3 million tons a year. Due to the war the new
line was only put in trial but never started effective operation.
In 2005, the negotiations on the privatization of the Bosanski Brod Refinery begin with the
NefteGazInKor, a part of the Russian state-owned Zarubezhneft. The privatization package
included the Bosanski Brod Oil Refinery, the Modriča Oil Refinery and the Petrol Banja Luka
Company. The contract on selling the majority shareholding, i.e., the state's share in the
Bosanski Brod Refinery was signed on May 22nd, 2007. The contract binds the new owner to
invest in the Refinery in order to start production, modernize the plant and improve the
quality of final products. The value of the contract is 979 million Euros, out of which 42 million
Euros are allocated for buying 80% share in the Bosanski Brod Refinery, about 67 million
Euros for 75.6% share in the Modriča Refinery and 10 million Euros for 80% share in Petrol.
Banja Luka. In the Protocol signed in August 2006, Zarubezhneft took the obligation to
process 4.2 million tons a year in the Bosanski Brod Refinery, as well as 130,000 tons of
motor oils and lubricants in the Modriča Refinery, and to sell at least 2.5 million tons of
petroleum products a year through Petrol Banja Luka. The Protocol assumes that 153 million
Euros will be invested in the Bosanski Brod Oil Refinery, 35.2 million Euros in the Modriča
Refinery and around 32 million Euros in Petrol. Banja Luka. The investments should take
place over a period of four years. The Moscow-based Vnešekonombank has committed itself
to finance the purchase of crude oil and all the investments related to this project. The
NefteGazInKor also took an obligation to build a railway line connecting the Bosanski Brod
Refinery to the Modriča Refinery, worth 59 million Euros, which will be transferred to the RS
Government for use free of charge. Since preparatory actions for the start of the production
have already been taken, it is to be expected that in the following several years the Bosanski
Brod Oil Refinery will become an important subject in oil economy of the whole region.
6.2. Sisak Oil Refinery

This is one of the two of INA's refineries. It is located 50 km from Zagreb, the country's
largest petrol products marketplace. The Refinery processes domestic oil and the oil
imported from Russia through the Družba 1 and Družba 2 pipelines. There is also a
possibility of oil supply from Mediterranean by the Janaf pipeline. On average, the Refinery
processes between 2.0 and 2.2 million tons of oil annually. Its product mix includes LPG,
motor gasoline, naphtha, jet fuel, and kerosene for wells, fuel oils, coke – green and calcite,
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106
and bitumen. The plan is to improve the quality of its products until 2011 by achieving the
EURO V standard and to increase the processing capacity from the current 2.3 million tons
up to 3.2 million tons per year. The modernization of the refinery will include the following
projects: isomerisation, HDS FCC petrol, Claus, revamp of Coking, HDS/MHC, hydrogen
production, and reconstruction of the existing plants. The total value of planned investments
amounts to approximately half a billion Euros.
The modernization process started with the construction of a desulphurization plant (Claus)
which is set to start operation in early October 2007. This plant is expected to enable the
reduction of sulfur dioxide emission by about 50%. The investment is worth 24 million USD.
6.3. Rijeka Oil Refinery

The refinery in Rijeka (Urinj) is owned by INA and is located 12 km south of Rijeka, and has
its own port for the supply and dispatch of goods, crude oil and petrol products. Plant
producing lubricants and bitumen is located in Mlaka. The refinery is connected to the Janaf
pipeline system by a 7.2 km long sea line with diameter of 20", leading to the port and oil
terminal in Omišalj on the island of Krk. The land traffic infrastructure (roads and railway
lines) is fully in place and provided with all the necessary devices for the shipping of
petroleum products.
The Rijeka Refinery produces LPG, naphtha, motor gasoline, kerosene, jet fuels, diesel,
fuels, bunkers, bitumen, liquid sulfur, base oils, automotive and industrial lubricants,
lubricating greases, and paraffin.
The modernization of the Refinery is underway and its first phase includes the building of a
mild hydrocracking unit with auxiliary installations, while the next phase foresees the
construction of a residual treating unit. The investments planned for realization until 2011
amount to about half a billion Euros.
The Refinery has an exceptionally favorable position for supply of the Croatian market, as
well as the markets of south Bosnia and Herzegovina, Slovenia, Montenegro, and other
Mediterranean countries.
6.4. Pančevo Oil Refinery

This refinery is a part of the Serbian petrol company called Naftna industrija Srbije head-
quartered in Novi Sad. It is a fuel-type refinery producing motor gasoline, paraffinic and
aromatic solvents, feed for petrochemical industry, bitumen, and sulfur. Primary and
secondary units are designed in such a way as to enable processing of various types of
crude oil. Crude oil (domestic and imported) is supplied to the Refinery by the pipeline
system and by the river – barges. Petroleum products are shipped by the product pipeline,
tank trucks, railway and barges. The Refinery is about 14 km from of Belgrade, the largest
consumption centre of the country. It has its own port on the Danube, pipeline connection,
truck loading facilities, and railway stations with devices for the dispatch of petrol products
and crude oil acceptance. The Refinery has the primary capacity for processing 4.8 million
tons of crude oil per year.
It also designed the two-phase development plan in order to achieve the EU quality
standards in petroleum products. The first phase was realized during 2003 and 2004 and it
included the selection of licenses and basic engineering design. By the end of 2006 the
implementation of the second phase of the development plan was set in motion and it
encompassed design, purchase of equipment and construction of the following units:
• Hydrodesulphurization of gasoline (HDS) and continuous catalytic reforming (CCR)
• Mild hydrocracking of vacuum gas oils and hydrodesulphurization of gas oils and
kerosene (MHC/HDT)

107
• A sulfur recovery unit

• A sulfuric acid regeneration unit
• A hydrogen production unit (PSA)
The expected effects of the mild hydrocracking of vacuum gas oils and
hydrodesulphurization of gas oils and kerosene MHC/HDT unit are the following:
• Increasing diesel yield (ca 400,000 tons/y)
• Increasing gasoline yield (ca 155,000 tons/y + increase of yield on FCC)
• Reducing sulfur content in diesel fuel (to 10 ppm)
• Increasing diesel cetane number
• Essentially reducing SOx and NOx emissions in flue gases of FCC
• Reducing sulfur content in FCC gasoline (about 20 ppm)
The investment plans in the Pančevo Refinery amounted to 420,381,000 Euros, out of which
61,161,000 Euros were used by mid-2006. The plan is to apply the remaining sum of
359,220,000 Euros before 2010.
These investments are aimed at:
• Enhancing technical and technological reliability of processing and non-processing
installations (total investment plan amounted to 30,874,000 Euros, and 3,450,000
Euros were invested by mid-2006)
• Environmental protection (total investment plan amounted to 78,360,000 Euros, and
27,300,000 Euros were invested by mid-2006)
• Achieving the EU 2009+ standard in gasoline and diesel production (total investment
plan amounted to 179,561,000 Euros, and 1,411,000 Euros were invested by mid-
2006)
• Other projects (total investment plan amounted to 131,587,000 Euros, and by mid-
2006, 29 million Euros were applied).
6.5. Novi Sad Oil Refinery

Same as the Pančevo Refinery, the Novi Sad Refinery operates within the system of the
Naftna industrija Srbije. The installed primary processing capacity is 2 million tons of crude
oil per year and 0.5 million tons of naphthenic oil for the production of motor oils. The crude
oil is supplied to the refinery mainly by the Jadran naftovod (JANAF) system, while the oil
from the domestic fields is supplied to the Refinery by the Adorian and Elemir pipelines.
The Refinery's strategic goal is to become an “export oriented refinery” through the following
projects designed for this purpose:
- Projects for improving the quality of products

• Reconstruction of the HDS Unibon and HI – FI Hydrofinishing units for low-sulfur
diesel production (50 ppm sulfur) as to enable daily production of 1,400 tons of diesel
in compliance with the EURO 4 standard
• HDS of medium distillates and MHC in the second phase as to enable the production
of additional quantities of 50 ppm sulfur diesel, and 10 ppm sulfur diesel in the
following phase
• Construction of the light gasoline isomerisation unit as to enable the production of
high octane components for unleaded gasoline according to JUS EN 228 (EURO 4)
standard. At the same time it would lead to the reduction of benzene and aromatic
emissions in the environment
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- Projects for improving energy efficiency and reducing operating costs
• The completion of the Visbreaking unit should increase the production of “white
products” and significantly reduce the production of masut
• Integrated operation with the Cogeneration unit Novi Sad as to enable the production
of electricity and steam for the Refinery's own use and thermal energy for the city of
Novi Sad. This would ensure the sale of masut to the local Cogeneration unit and
also the Refinery's emissions reduction
• In March 2006 the implementation of the information-communication system SAP
was introduced, which should improve the cash flow and commodity management at
the company level
- Projects for reducing environmental impact

• Amine washing and sulfuric acid production should enable the reduction of sulfuric
compound emissions, the operation of the low-sulfur diesel production unit and
Visbreaking units in accordance with the environmental standards
The Refinery’s investment plan totals to 64,057,000 Euros, out of which 9,662,000 Euros
were applied before mid-2006. The remaining investments are planned to be realized by
2010.
The mentioned investments are planned for the following projects:
• Enhancing technical and technological reliability of the processing and non-

processing units (total investment plans amount to 11,300,000 Euros)
• Environmental protection (total investment plan amounts to 24,338,000 Euros, and by
mid-2006 the amount of 3,064,000 Euros was used. The plan is to apply the total
planned amount by 2008)
• Achieving the EU 2009+ standard in production of gasoline and diesel (investment
plan amounts to a total of 2,100,000 Euros, out of which 139,000 Euros was applied
by mid-2006)
• Other projects (planned total investment of 26,318,000 Euros; 6,457,000 Euros
invested before mid-2006)

109
C R O A T I A
BOSNIA
AND
S E R B I A
HERZEGOVINA
MONTENEGRO
Sisak Oil Refinery Bosanski Brod Oil Refinery Novi Sad Oil Refinery
Pančevo Oil Refinery Rijeka Oil Refinery
Figure 6.1 Potential markets of regional refineries
The ratification of the Central European Free Trade Agreement (CEFTA) is expected to
eliminate the obstacles to petrol product trade among the counties concerned and open the
markets for all these refineries at full extent. The interdependence of the refineries can be
determined assuming that the potential market for the refineries spans over the area of 200
km from a refinery. . The 200 km distance is taken as optimal for petroleum product supply
based on transportation costs. Figure 6.1 shows the potential markets (imagined circles) of
each refinery, except for possible export to the markets other than BIH, Croatia and Serbia. It
shows that the refineries located in Croatia, Serbia and Bosnia and Herzegovina fully cover
these countries’ markets. Since the potential markets of individual refineries overlap (Figure
6.1) it is necessary to look into the regional demand for petroleum products in more detail
(current and projected consumption, Table 6.1), as well as into installed and planned
capacities (Table 6.2), petroleum product quality levels and development plans of the
refineries in each country.
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Table 6.1 Consumption of petroleum products in BIH, Croatia and Serbia
1,000 toe 2005 2010 2015 2020

Motor fuels 792 1,150 1,381 1,659
Other final consumption 261 349 408 479
BIH
Total transformation sector 165 212 239 270
Total 1,218 1,711 2,028 2,408
Motor fuels 2,248 2,544 2,861 3,227
Other final consumption 926 909 970 942
Croatia
Total transformation sector 1,465 1,756 1,435 1,234
Total 4,639 5,209 5,267 5,403
Motor fuels 1,808 2,697 3,163 3,708
Other final consumption 1,420 1,643 1,843 2,068
Serbia
Total transformation sector 331 387 428 468
Total 3,560 4,728 5,434 6,244
BIH, Motor fuels 4,848 6,391 7,405 8,594
Croatia Other final consumption 2,607 2,901 3,222 3,489
and Total transformation sector 1,961 2,355 2,103 1,972
Serbia
Total 9,417 11,647 12,729 14,055
Source: EIHP, Analysis and projection of oil and petroleum products of the current users of the Janaf
system
Table 6.2 Characteristics and development plans of the regional refineries
Oil refinery
1,000,000 t Total
Rijeka Sisak Pančevo Novi Sad Bosanski Brod
Installed capacity 4.5 2.3 4.8 2.5 1.3 15.4
Production 5.313 3.326 0.135 8.774
2005
Export* 1.222 0.075 0 1.297

Consumption in country
where refinery is located 4.640 3.560 1.20 9.4
Planed installed capacity 4.5 3.2 4.8 2.5 4,2 19.2
2010
Planned consumption in
country where refinery is 5.21 4.73 1.71 11.65
located
Planed installed capacity 4.5 3.2 4.8 2.5 4.2 19.2
2020
Planned consumption in
country where refinery is 5.4 6.24 2.41 14.05
located
* excluding export to Croatia, Serbia and Bosnia and Herzegovina
In 2005 the installed refining capacities totaled to 15.4 million tons of oil which is 6 million
tons more than total needs for petroleum products in the respective countries of the observed
refineries (Table 6.2). In such circumstances, the capacity utilization level in Serbian
refineries was around 45%, in Croatia around 78%, while the Bosanski Brod Refinery used
only 10% of its capacities.
All the observed refineries are in approximately equal position when it comes to the product
quality and environmental protection. In other words, all of them have to make significant
investments in order to fully meet the EURO IV and EURO V quality requirements. Given the
fact that these countries, as well as the potential exports markets, abide to the legislation on
quality of petroleum products, the investments in modernization of refineries appears to be

111
necessary as it is the product quality that will make a crucial difference in placement of
petroleum products both on domestic and export markets. Due to significant financial
problems of the Bosanski Brod Refinery,, its capacity utilization was very low in recent years.
According to the Refinery's sources, a contract was signed with the Russian company
Zarubezhneft on selling a share in the Refinery, and the line processing 1.3 million tons
should start operating continuously by the end of year. The investor intends to repair the 3
million tons processing line, which will increase the operating capacity up to 4.3 million tons.
Establishing the production and the planned increase of processing capacities in refineries
after 2010 will widen the gap between the installed capacities and consumption in the
respective countries where the refineries are located. However, this gap should be reduced
by increased consumption of petroleum products. This is expected to occur after 2010 thanks
to the growing petroleum product demand. Given the surplus in the refining capacities (which
decreases as petroleum product consumption grows) it is necessary to consider the option of
downsizing some of these capacities. One of the critical factors in evaluation of eventual
close down is the change in ownership structure of the refineries. If concentration of refining
capacities takes place, i.e., several refineries come under the same owner, it can be
expected that excessive capacities will be closed. Otherwise, we will not see the downsizing
but only a lowering level of refining capacity utilization, while the product quality and price will
actually set up the competition field. From this point of view, the refining business will be
directly influenced by the speed of realizing the modernization plans and achieving the
European quality levels.
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7. CONCLUSIONS AND RECOMMENDATIONS

113
The oil industry has strategic importance in the energy system and considerable influence on
countrys’ economic sector in general. Today the oil sector is characterized by a constantly
growing demand which is especially evident in the developing countries. Due to this, the oil
market is highly sensitive to global political developments, and any new crisis in the world
translates into price rise on the crude oil market. All this indicates that each state must have
a long term energy policy and energy strategy with a far-reaching vision of how this energy
sector will be developed.
Therefore the topic of this Module is an in-depth analysis of the status of Bosnia and
Herzegovina's energy oil sector, especially in the light of its high dependence on imported oil
and petroleum products.
The Republic of Bosnia and Herzegovina has production and processing capacities in the
Bosanski Brod Refinery. The refinery has the capacity to process 4,320,000 tons of crude oil
per annum. In addition, the Modriča Refinery has capacities of 120,000 tons per annum.
Problems in the operation of the Bosanski Brod Refinery occurred at the beginning of the war
because of halted supply of crude oil by the Janaf pipeline system and serious damage of
the plant's equipment. In 1988 the conditions for the production of products the refinery had
produced before the war were re-established, but due to lack of financial resources only less
than 20% of capacities were effectively utilized. In May 2007 a contract was signed with the
Russian company NefteGazInKor on selling a majority share in the Bosanski Brod Refinery,
Modriča Refinery and distribution network of Petrol Banja Luka. By this contract the Russian
company took obligation to invest about 300 million EUR in the modernization of both
refineries and distribution network until 2010. It also took obligation to put in operation all
installed processing capacities.
Given a low level of the Bosanski Brod Refinery's output in the past few years, the demand
for petroleum products was covered from import. Total consumption of petroleum products in
BIH was about 1.2 million tons, of which diesel fuel and motor gasoline make for more than
50%. The main quantities of petroleum products are imported from Croatia, Serbia and
Hungary. Petroleum product distribution is carried out through more than 800 service
stations, which is exceptionally large number given BIH's total consumption scale in
comparison to countries.
The Study also regards the level of explorations of geological reserves of oil. At present, the
level of explorations give an estimate of about 50 million tons of oil. Since these estimates
are mainly based on gravimetric, geomagnetic and geoelectrical explorations while only few
exploration drills were made, it is necessary to carry out further explorations in order to
establish commercially viable oil reserves.
In addition to the above mentioned aspects of the oil industry, an analysis is made of the
legal regulation of the BIH oil sector, primarily from the point of view of legally required
quality of petroleum products, environmental protection, retail price setting and establishing
compulsory stocks. The adoption of the Decision on the quality of liquid petroleum fuels
(Official Gazette BIH 27/02) and its amendments introduced to a large extent the quality
standards set out in the EU Directives. An important element of this Decision is the program
which defines the compliance procedure and the scope of supervision of petroleum product
quality, which significantly contributed to improving the quality of petroleum products in the
BIH market.
Environmental protection in BIH is regulated at the entity and Brčko District level, by the laws
regulating each environmental aspect separately. There are also legal acts which regulate
the so called environmental permits. Regulation and control of industrial plants' activities in
the EU countries is defined under the IPPC Directive 96/61/EC, the aim of which is to
minimize the pollution from various industrial sources. The recommendation is to harmonize
legal regulation both in terms of organization and in terms of maximum limits of emissions in
the environment.
Retail prices for petroleum products in BIH are set up freely, i.e., the law does not define cap
prices. When comparing the net prices, excluding excise duties and VAT, with those in the
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114
surrounding countries and the EU countries it can be concluded that regardless of relatively
high competition on the BIH petroleum products market this way of price setting does not
always guarantee the lowest prices for customers. Due to this, it is recommended to
introduce the retail price indexing mechanism for petroleum products based on price
changes on the world market and the exchange rate for USD.
Given the importance of oil and petroleum product supply, establishing the so called
compulsory stocks is an essential aspect of any state. In order to control the negative
impacts of reduced petroleum product supply, various organizations have been set up (like
IEA) whose members are obliged to maintain stocks of oil and petroleum products in
quantities laid down by these organizations. In the EU countries the obligation is laid down to
hold oil and petroleum product stocks in the amount of a 90 day average daily consumption
in the preceding year. Since there is no legal regulation on this issue in BIH, it is proposed to
put in place a legal framework and to gradually form compulsory stocks of oil and petroleum
products. It is also proposed to establish an agency for compulsory stocks with the task to
organize, supervise, and administer compulsory stocks. According to the EU Directives
compulsory stocks can be stored outside the country as well, but since the surrounding
countries also do not have such a system or it is only in the making, it is proposed to build
storage capacities for compulsory stocks in the BIH territory. This is sustained by the need to
store compulsory stocks as close to the consumption centers as possible in order to respond
efficiently to supply disruption situations.
With the view of future development of the oil sector as a crucial economic actor in Bosnia
and Herzegovina the recommendations are to take the following actions:
• Continue oil and gas explorations in the Bosnia and Herzegovina territory based on
favorable results achieved in the explorations so far;
• Ensure quality of petroleum products on the market in accordance with the current
legal regulation through full implementation of regulations on quality control and
their eventual enhancement;
• Continuously monitor the EU petroleum product quality standards and compliance;
• Regulate retail prices for petroleum products by introducing indexing mechanisms
based on price changes on the world market and USD exchange rate;
• Define conditions for expanding the retail network and the opening of new service
stations through urban and spatial plans;
• Adopt legal regulation on compulsory stocks system for oil and petroleum products,
establish an agency for compulsory stocks and gradually form the stocks in
accordance with the EU standards;
• Excise duty decrease for light fuel oil with regard to diesel oil.

115
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8. REFERENCES

117
1. Oil economy of Bosnia and Herzegovina: Condition and possibilities of

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19. Council Directive 85/210/EEC of March 20th, 1985 on the approximation of the laws
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the approximation of the laws of Member States concerning the lead content of petrol.//
Official Journal of the European Communities, L 225, 13/08/1987, p. 33.
22. Council Directive 75/716/EEC of November 24th, 1975 on approximation of the laws
of the Member States relating to the sulfur content of certain liquid fuels.// Official
23. Council Directive 93/12/EEC of March 23rd, 1993 relating to the sulfur content of
certain liquid fuels.// Official Journal of the European Communities, L 074, 27/03/1993,
p. 81.
24. Council Directive 1999/32/EC of April 26th, 1999 relating to a reduction in the sulfur
content of certain liquid fuels and amending Directive 93/12/EEC.// Official Journal of
the European Communities, L 121, 11/05/1999, p. 13.
25. Directive 2005/33/EC of the European Parliament and of the Council of July 6th,
2005 amending Directive 1999/32/EC.// Official Journal of the European Communities,
L 191, 22/07/2005, p. 59.
26. Council Directive 98/70/EC of the European Parliament and of the Council of October
13th, 1998 relating to the quality of petrol and diesel fuels and amending Council
directive 93/12/EEC.// Official Journal of the European Communities, L 350,
28/12/1998, p. 58.
27. Commission Directive 2000/71/EC of November 7th, 2000 to adapt the measuring
methods as laid down in Annexes I, II, III and IV to Directive 98/70/EC of the European
Parliament and of the Council to technical progress as foreseen in Article 10 of that
Directive.// Official Journal of the European Communities, L 287, 14/11/2000, p. 46.
28. Directive 2003/17/EC of the European Parliament and of the Council of March 3rd,
2003 amending Directive 98/70/EC relating to the quality of petrol and diesel fuels.//
29. Law on Environmental Protection.// OG RH, 82 (1994), 128 (1999).
30. Law on Protection of Air.// OG RH, 178 (2004).
31. Regulation on quality of liquid petroleum.// OG RH, 53 (2006).
32. Council Directive 95/60/EC of November 27th, 1995 on fiscal marking of gas oils and
kerosene.// Official Journal of the European Communities, L 291, 06/12/1995, p. 46.
33. Commission Decision C(2002) 1244 of April 8th, 2002 amending Decision
2001/574/EC establishing a common fiscal marker for gas oils and kerosene.// Official

119
34. Decision on required quality of liquid fuels.// OG BIH, 27 (2002), 28 (2004), 16

(2005), 14 (2006) and 19 (2007).
35. Council Directive 96/61/EC of September 24th, 1996 concerning pollution prevention
and control.// Official Journal of the European Communities, L 257, 10/10/1996, p. 26.
36. Directive 2003/35/EC of the European Parliament and of the Council of May 26th,
2003 providing for public participation in respect of the drawing up of certain plans and
programs relating to the environment and amending with regard to public participation
and access to justice Council Directives 85/337/EEC and 96/61/EC.// Official Journal of
37. Directive 2003/87/EC of the European Parliament and of the Council of October
13th, 2003 establishing a scheme for greenhouse gas emission allowance trading within
the Community and amending Council Directive 96/61/EC.// Official Journal of the
38. Regulation (EC) No. 1882/2003 of the European Parliament and of the Council of
September 29th, 2003 adapting to Council Decision 1999/468/EC the provisions
relating to committees which assist the Commission in the exercise of its implementing
powers laid down in instruments subject to the procedure referred to in Article 251 of
the EC Treaty.// Official Journal of the European Communities, L 284, 31/10/2003, p. 1.
39. Regulation (EC) No. 166/2006 of the European Parliament and of the Council of
January 18th, 2006 concerning the establishment of a European Pollutant Release and
Transfer Register and amending Council Directives 91/689/EEC and 96/61/EC.//
40. European Parliament and Council Directive 94/63/EC of December 20th, 1994 on
the control of volatile organic compound (VOC) emissions resulting from the storage of
petrol and its distribution from terminals to service stations.// Official Journal of the
41. Council Directive 84/360/EC on the combating of air pollution from industrial plants.//
42. Directive 2000/69/EC of the European Parliament and of the Council of November
16th, 2000 relating to limit values for benzene and carbon monoxide in ambient air.//
Official Journal of the European Communities, L 313, 13/12/2000. p. 12
43. Decree on limit values of air pollutants from stationary sources.// OG RH, 21
(2007).
44. Regulation on technical standards of environmental protection from emissions of

volatile organic compounds resulting from storage and distribution of gasoline.//
OG RH, 135 (2006).
45. Law on Environmental Protection.// OG FBIH, 33 (2003).
46. Rules for monitoring air pollutant emissions.// OG FBIH, 12 (2005).
47. Rules on limit values of emissions into the air from combustion installations.//
OG FBIH, 12 (2005)
48. Rules for monitoring air pollutant emissions.// OG FBIH, 12 (2005).
Final Report
120
49. Law on Environmental Protection.// OB RS, 53 (2002).
50. Law on Protection of the Air.// OB RS, 53 (2002).
51. Rules for monitoring air pollutant emissions.// OB RS, 39 (2005).
52. Rules for the limit values of air pollutant emissions..// OB RS, 39 (2005).
53. Rules on limit values of emissions into the air from combustion installations.//
OB RS, 39 (2005)
54. Law on Protection of Air.// OB BD, 25 (2004).
55. Directive 2000/60/EC of the European Parliament and of the Council of October
23rd, 2000 establishing a framework for Community action in the field of water policy.//
56. Decision 2455/2001/EC of the European Parliament and of the Council of

November 20th, 2001 establishing the list of priority substances in the field of water
policy and amending Directive 2000/60/EC.// Official Journal of the European
Communities, L 331, 15/12/2001, p. 1.
57. Law on Waters.// OG RH, 107 (1995).
58. Law on Waters.// OG F BIH, 70 (2006).
59. Law on Waters.// OB RS, 53 (2002).
60. Law on Water Protection.// OB BD, 25 (2004) and 1 (2005).
61. Directive 2006/12/EC of the European Parliament and of the Council of April 5th,
2006 on waste.// Official Journal of the European Communities, L 114, 27/04/2006, p.
9.
62. Commission Decision 2000/532/EC of May 3rd, 2000 replacing Decision 94/3/EC
establishing a list of wastes pursuant to Article 1(a) of Council Directive 75/442/EEC on
waste and Council Decision 94/904/EC establishing a list of hazardous waste pursuant
to Article 1(4) of Council Directive 91/689/EEC on hazardous waste.// Official Journal of
63. Commission Decision 2001/118/EC of January 16th, 2001 amending Decision

2000/532/EC as regards the list of wastes (notified under document number C(2001)
108).// Official Journal of the European Communities, L 47, 16/02/2001, p. 1.
64. Commission Decision 2001/119/EC of January 22nd, 2001 amending Decision

2000/532/EC replacing Decision 94/3/EC establishing a list of wastes pursuant to
Article 1(a) of Council Directive 75/442/EEC on waste and Council Decision 94/904/EC
establishing a list of hazardous waste pursuant to Article 1(4) of Council Directive
91/689/EEC on hazardous waste.// Official Journal of the European Communities, L 47,
16/02/2001, p. 32.
65. Council Decision 2001/573/EC of July 23rd, 2001 amending Commission Decision
2000/532/EC as regards the list of wastes).// Official Journal of the European
Communities, L 203, 28/07/2001, p. 18.

121
66. Council Directive 75/439/EEC of June 16th, 1975 on the disposal of waste oils.//
67. Council Directive 87/101/EEC of December 22nd, 1986 amending Directive

75/439/EEC on the disposal of waste oils Official Journal of the European
Communities, L 42, 12/2/1987, p. 43.
68. Council Directive 91/692/EEC of December 23rd, 1991 standardizing and rationalizing
reports on the implementation of certain Directives relating to the environment.// Official
69. Directive 2000/76/EC of the European Parliament and of the Council of December
4th, 2000 on the incineration of waste.// Official Journal of the European Communities, L
332, 28/12/2000, p. 91.
70. Law on Waste.// OG RH, 178 (2004) and 111 (2006).
71. Regulation on categories, types and classification of waste with catalogue and
list of hazardous waste.// OG RH, 50 (2005).
72. Rules for waste management.// OG RH, 23 (2007).
73. Law on Waste Management.// OG FBIH, 33 (2003).
74. Rules on waste categories.// OG FBIH, 9 (2005).
75. Regulation on waste permit.// OG FBIH, 31 (2006).
76. Regulation on selective collection, packaging, and marking of waste.// OG FBIH,

38 (2006).
77. Law on Waste Management.// OB RS, 53 (2002).
78. Law on Waste Management.// OB BD, 25 (2004) and 1 (2005).
79. Council Decision 2001/792/EC of October 23rd, 2001 establishing a Community

mechanism to facilitate reinforced cooperation in civil protection assistance
interventions.// Official Journal of the European Communities, L 297, 15/11/2001, p. 7.
80. Council Decision 1999/847/EC of December 9th, 1999 establishing a Community

action programs in the field of civil protection.// Official Journal of the European
Communities, L 327, 21/12/1999, p. 53.
81. Council Directive 96/82/EC of December 9th, 1996 on the control of major-accident
hazards involving dangerous substances.// Official Journal of the European
Communities, L 10, 14/01/1997, p. 13.
82. Plan for environmental protection interventions.// OG RH, 82 (1999), 86 (1999) and
12 (2001).
83. Intervention plan in maritime pollution incidents in the Republic of Croatia.// OG

RH, 8 (1997).
84. National Plan for protection of waters.// OG RH, 8 (1999).
Final Report
122
85. Council Directive 68/414/EEC of December 20th, 1968 imposing an obligation on
Member States of the EEC to maintain minimum stocks of crude oil and/or petroleum
products.// Official Journal of the European Communities, L 308, 23/12/1968, p. 14.
86. Council Directive 72/425/EEC of December 19th, 1972 amending the Council Directive
of December 20th, 1968 imposing an obligation on Member States of the EEC to
maintain minimum stocks of crude oil and/or petroleum products.// Official Journal of
the European Communities, L 291 , 28/12/1972, p. 0154.
87. Council Directive 98/93/EC of December 14th, 1998 amending Directive 68/414/EEC
imposing an obligation on Member States of the EEC to maintain minimum stocks of
crude oil and/or petroleum products.// Official Journal of the European Communities, L
358, 31/12/1998, p. 100.
88. Council Directive 73/238/EEC of July 24th, 1973 on measures to mitigate the effects of
difficulties in the supply of crude oil and petroleum products.// Official Journal of the
89. Council Decision 77/706/EEC of November 7th, 1977 on the setting of a Community
target for a reduction in the consumption of primary sources of energy in the event of
difficulties in the supply of crude oil and petroleum products.// Official Journal of the
90. Proposal for a Council Decision COM(2002) 488 final repealing Council Decision
68/416/EEC on the conclusion and implementation of individual agreements between
governments relating to the obligation of Member States to maintain minimum stocks of
crude oil and/or petroleum products and Council Decision 77/706/EEC on the setting of
a Community target for a reduction in the consumption of primary sources of energy in
the event of difficulties in the supply of crude oil and petroleum products.// Official
Journal of the European Communities, C 331 E, 31/12/2002, p. 280.
91. http://www.iea.com
92. Law on Market of Oil and Petroleum Products.// OG RH, 57 (2006).
93. Rules for general conditions and tariffs for storing compulsory stocks of oil and
petroleum products.// OG RH, 68 (2003).
94. Consent for conclusion of agreement to share transfer free of charge to the
Enterprise for stockholding of liquid fuels Terminal Sarajevo-Ilidža, between the
Federation of Bosnia and Herzegovina and the Enterprise for stockholding of
liquid fuels Terminali Federacije Sarajevo.// OG F BIH, 718 (2005).
95. State of energy sector in BIH/F BIH: Report for the thematic session of F BIH
Parliament dedicated to the current state and further development of the energy
sector in BIH/F BIH. Ministry of Energy, Mining and Industry F BIH, 2006.
96. Decision on amount of charges for financing work of the Croatian Agency for
compulsory stocks of oil and petroleum products for the year 2007// OG RH, 8,
(2007).
97. Law on Market of Oil and Petroleum Products.// OG RH, 57, (2006).
98. Gas Vehicle Report.//NGV Communication group, Italy, Vol. 6, (2007).

123
Final Report
124
9. LIST OF TABLES

125
Table 2.1 Yields of the old line with and without hydrocracking (based on 330 days operation) 5
Table 2.2 New line’s yields based on 330 days per year .......................................................... 8
Table 2.3 Total reservoir volume in the Bosanski Brod Oil Refinery.......................................... 8
Table 2.4 Oil processing in the Bosanski Brod Oil Refinery in the period 2000 - 2005.............. 9
Table 2.5 Output and sale of products by markets in 2005 ..................................................... 10
Table 2.6 Product sales by markets in the period 2000 - 2005 ............................................... 10
Table 2.7 Planned investments in the Bosanski Brod Refinery, Modriča Refinery and Petrol
Banja Luka......................................................................................................................... 11
Table 2.8 Sales by markets in the period 2000 - 2005 ............................................................ 13
Table 2.9 Output in the period 2000 - 2005 ............................................................................ 13
Table 2.10 BIH import and export of petroleum products in the period 2000 - 2005................ 14
Table 2.11 Import of oil and petrol products in BIH in 2005 ................................................... 15
Table 2.12 Structure of petroleum product imports in BIH by countries of origin in 2005 ....... 15
Table 2.13 Import of petroleum products in the period 2000 - 2005 in FBIH ........................... 15
Table 2.14 Import and export of crude oil and petrol products in the period 2000 - 2005 in the
Republic of Srpska............................................................................................................. 16
Table 2.15 Import of petrol products in the period 2000 - 2005 in the Brčko District ............... 17
Table 2.16 Petrol product consumption in BIH in 2005 ........................................................... 17
Table 2.17 Overview of petroleum product consumption by privately-owned passenger
vehicles.............................................................................................................................. 18
Table 2.18 Petroleum product consumption in household sector, services and industry......... 20
Table 2.19 Petroleum product consumption in FBIH in 2005 .................................................. 21
Table 2.20 Petroleum product consumption in BIH in 2005 .................................................... 21
Table 2.21 Petroleum product consumption in the Brčko District in 2005 ............................... 21
Table 2.22 Shares of individual importers of petroleum products in total imports at BIH
market in 2005 ................................................................................................................... 22
Table 2.23 Realized total petroleum products consumption in 2000-2005 .............................. 25
Table 2.24 Realized total petroleum product consumption in the period 2000-2005 (FBIH).... 29
Table 2.25 Realized total petroleum product consumption in the period 2000-2005 (RS) ....... 33
Table 2.26 Realized total petroleum products consumption in 2000-2005 (BD) ...................... 37
Table 2.27 Forecasting of total petroleum products consumption until 2020 (BIH).................. 41
Table 2.28 Forecasting of total petroleum products consumption until 2020 (FBIH) ............... 45
Table 2.29 Forecasting of total petroleum products consumption until 2020 (RS)................... 49
Table 2.30 Forecasting of total petroleum products consumption until 2020 (BD)................... 52
Table 3.1 Prices of unleaded 95 octane gasoline (*in the first half of the year) ....................... 66
Table 3.2 Excise duty in price of unleaded 95 octane gasoline (*in the first half of the year) .. 67
Table 3.3 Excise duties of motor fuel...................................................................................... 68
Final Report
126
Table 3.4 Excise duties on fuel for industrial and commercial use .......................................... 68
Table 3.5 Excise duties on fuel for heating and electricity....................................................... 69
Table 5.1 Storage capacities in the Federation of BIH and the Republic of Srpska................. 91
Table 5.2 Tariffs for oil and petroleum products storing at ELG Company .............................. 91
Table 5.3 Annual fees for financing oil and petroleum product stockholding obligation by
selected agencies .............................................................................................................. 92
Table 5.4 Total demand for petroleum products in the Republic of Bosnia and Herzegovina.. 93
Herzegovina ...................................................................................................................... 93
(BIH) .................................................................................................................................. 94
Table 5.7 Shares of petroleum products in the structure of crude oil processing .................... 94
Table 5.8 Quantities of petroleum products substituted by crude oil ( BIH) ............................. 94
products given the structure of refinery’s processing (BIH) ................................................ 95
Table 5.10 Needed stocks of crude oil and petroleum products by use of substitutes (BIH) ... 95
Table 5.11 Needed volume of storage space with maximum substitution of petroleum
products by crude oil (BIH)................................................................................................. 95
compulsory stocks (BIH) .................................................................................................... 96
Table 5.13 Investments in storage capacities for oil and petroleum product compulsory
stocks (BIH) ....................................................................................................................... 96
Table 5.14 Total demand for petroleum products in the Federation of Bosnia and
Herzegovina ...................................................................................................................... 96
Table 5.15 Average 90 day consumption of petroleum products in the Federation of Bosnia
and Herzegovina................................................................................................................ 96
products (Federation of BIH).............................................................................................. 97
Table 5.17 Quantity of petroleum products substituted by crude oil (Federation of BIH) ......... 97
products given the structure of refinery’s processing (Federation of BIH)........................... 97
Table 5.19 Needed stocks of crude oil and petroleum products by use of substitution
(Federation of BIH) ............................................................................................................ 97
product substitution by crude oil (Federation of BIH)......................................................... 97
compulsory stocks (Federation of BIH) .............................................................................. 98
stocks (Federation of BIH) ................................................................................................. 98
Table 5.23 Total demand for petroleum products in the Republic of Srpska ........................... 98
Table 5.24 Average 90 day consumption of petroleum products in the Republic of Srpska .... 99

127
products (RS)..................................................................................................................... 99
Table 5.26 Quantity of petroleum products substituted by crude oil (RS)................................ 99
products given the structure of refinery’s processing (RS) ................................................. 99
Table 5.28 Needed stocks of crude oil and petroleum products by use of substitution (RS) ... 99
product substitution by crude oil (RS) .............................................................................. 100
compulsory stocks (RS) ................................................................................................... 100
stocks (RS) ...................................................................................................................... 100
Table 5.32 Total demand of petroleum products in Brčko District ......................................... 101
Table 5.33 Average 90 day consumption of petroleum products in Brčko District ................. 101
products (BD)................................................................................................................... 101
Table 5.35 Quantity of petroleum products substituted by crude oil (BD).............................. 101
products given the structure of refinery’s processing (BD) ............................................... 102
Table 5.37 Needed stocks of crude oil and petroleum products by use of substitution (BD) . 102
product substitution by crude oil (BD) .............................................................................. 102
compulsory stocks (BD) ................................................................................................... 103
stocks (BD) ...................................................................................................................... 103
Table 6.1 Consumption of petroleum products in BIH, Croatia and Serbia ........................... 111
Table 6.2 Characteristics and development plans of the regional refineries.......................... 111
(according to scenario S1-low growth) ............................................................................. 140
Herzegovina (according to scenario S1-low growth) ........................................................ 140
(BIH, according to scenario S1-low growth) ..................................................................... 140
Table 12.4 Quantities of petroleum products substituted by crude oil (BIH, according to
scenario S1-low growth) .................................................................................................. 140
products given the structure of refinery’s processing (BIH, according to scenario S1-low
growth) ............................................................................................................................ 140
Table 12.6 Needed stocks of crude oil and petroleum products by use of substitutes (BIH,
according to scenario S1-low growth) .............................................................................. 141
products by crude oil (BIH, according to scenario S1-low growth).................................... 141
Final Report
128
Herzegovina (according to scenario S1-low growth) ........................................................ 141
and Herzegovina (according to scenario S1-low growth) ................................................. 141
Table 12.10 Needed volume of storage capacities for stocking compulsory stocks of
petroleum products (FBIH, according to scenario S1-low growth) .................................... 142
Table 12.11 Quantity of petroleum products substituted by crude oil (FBIH, according to
products given the structure of refinery’s processing (FBIH, according to scenario S1-low
growth) ............................................................................................................................ 142
Table 12.13 Needed stocks of crude oil and petroleum products by use of substitution (FBIH,
product substitution by crude oil (FBIH, according to scenario S1-low growth) ................ 142
Table 12.15 Total demand for petroleum products in the Republic of Srpska (according to
petroleum products (RS, according to scenario S1-low growth) ....................................... 143
Table 12.18 Quantity of petroleum products substituted by crude oil (RS, according to
products given the structure of refinery’s processing (RS, according to scenario S1-low
growth) ............................................................................................................................ 143
Table 12.20 Needed stocks of crude oil and petroleum products by use of substitution (RS,
product substitution by crude oil (RS, according to scenario S1-low growth).................... 144
Table 12.22 Total demand of petroleum products in the Brčko District (according to scenario
S1-low growth)................................................................................................................. 144
Table 12.23 Average 90 day consumption of petroleum products in the Brčko District
petroleum products (BD, according to scenario S1-low growth) ....................................... 145
Table 12.25 Quantity of petroleum products substituted by crude oil (BD, according to
products given the structure of refinery’s processing (BD, according to scenario S1-low
growth) ............................................................................................................................ 145
Table 12.27 Needed stocks of crude oil and petroleum products by use of substitution (BD,
product substitution by crude oil (BD, according to scenario S1-low growth).................... 145

129
(according to scenario S3-sustainable) ............................................................................ 148
Herzegovina (according to scenario S3-sustainable) ....................................................... 148
(BIH, according to scenario S3-sustainable) .................................................................... 148
scenario S3-sustainable) ................................................................................................. 148
products given the structure of refinery’s processing (BIH, according to scenario S3-
sustainable) ..................................................................................................................... 148
Table 13.6 Needed stocks of crude oil and petroleum products by use of substitutes BIH,
according to scenario S3-sustainable) ............................................................................. 149
products by crude oil (BIH, according to scenario S3-sustainable)................................... 149
Herzegovina (according to scenario S3-sustainable) ....................................................... 149
and Herzegovina (according to scenario S3-sustainable) ................................................ 149
petroleum products (FBIH, according to scenario S3-sustainable) ................................... 150
products given the structure of refinery’s processing (FBIH, according to scenario S3-
sustainable) ..................................................................................................................... 150
product substitution by crude oil (FBIH, according to scenario S3-sustainable)................ 150
petroleum products (RS, according to scenario S3-sustainable) ...................................... 151
products given the structure of refinery’s processing (RS, according to scenario S3-
sustainable) ..................................................................................................................... 151
product substitution by crude oil (RS, according to scenario S3-sustainable)................... 152
Final Report
130
S3-sustainable)................................................................................................................ 152
petroleum products (BD, according to scenario S3-sustainable) ...................................... 153
products given the structure of refinery’s processing (BD, according to scenario S3-
sustainable) ..................................................................................................................... 153
product substitution by crude oil (BD, according to scenario S3-sustainable)................... 153

131
Final Report
132
10. LIST OF FIGURES

133
Figure 2.1 Output in Bosanski Brod Oil Refinery in the period 2000 – 2005.............................. 9
Figure 2.2 Total sales in 2005 by markets .............................................................................. 10
Figure 2.3 Product sales by markets in the period 2000 – 2005 ............................................. 11
Figure 2.4 Total production of Modriča Lube Refinery in the period 2000 - 2005 ................... 13
Figure 2.5 B&IH import and export of petroleum products in the period 2000 - 2005 .............. 14
Figure 2.6 Import of petroleum products in the period 2000 - 2005 in FBIH ............................ 16
Figure 2.7 Import and export of petrol products in the period 2000 - 2005 of the Republic of
Srpska ............................................................................................................................... 16
Figure 2.8 Import of petrol products in the period 2000 – 2005 in the Brčko District ............... 17
Figure 2.9 Consumption of motor gasoline and diesel fuel in transport for each zone
separately .......................................................................................................................... 19
Figure 2.10 Petroleum product consumption in household sector, services and industry for
each zone separately......................................................................................................... 20
Figure 2.11 Layout of oil and petroleum product storage facilities and railway routes in BIH .. 24
Figure 2.12 Total petroleum product consumption structures in the period 2000-2005 (BIH).. 26
Figure 2.13 Final petroleum product consumption structures in the period 2000-2005 (BIH) .. 26
(BIH) .................................................................................................................................. 27
Figure 2.15 Realized petroleum product consumption in industry in the period 2000-2005
(BIH) .................................................................................................................................. 27
(BIH) .................................................................................................................................. 28
Figure 2.17 Realized petroleum product consumption in services in the period 2000-2005
(BIH) .................................................................................................................................. 28
(BIH) .................................................................................................................................. 29
Figure 2.19 Structure of total petroleum product consumption in the period 2000-2005 (F
BIH) ................................................................................................................................... 30
Figure 2.20 Structure of final (energy) petroleum product consumption in the period 2000-
2005 (FBIH) ....................................................................................................................... 30
(FBIH)................................................................................................................................ 31
(FBIH)................................................................................................................................ 31
(FBIH)................................................................................................................................ 32
Figure 2.24 Realized petroleum products consumption in services in 2000-2005 (FBIH)........ 32
(FBIH)................................................................................................................................ 33
Figure 2.26 Structure of total petroleum product consumption in the period 2000-2005 (RS) . 34
Final Report
134
2005 (RS) .......................................................................................................................... 34
(RS) ................................................................................................................................... 35
(RS) ................................................................................................................................... 35
(RS) ................................................................................................................................... 36
(RS) ................................................................................................................................... 36
(RS) ................................................................................................................................... 37
Figure 2.33 Structure of total petroleum product consumption in the period 2000-2005 (BD) . 38
2005 (BD) .......................................................................................................................... 38
(BD) ................................................................................................................................... 39
(BD) ................................................................................................................................... 39
(BD) ................................................................................................................................... 40
(BD) ................................................................................................................................... 40
(BD) ................................................................................................................................... 41
Figure 2.40 Structure of total petroleum product consumption until 2020 (BIH) ...................... 42
Figure 2.41 Structure of final (energy) petroleum product consumption until 2020 (BIH) ........ 42
Figure 2.42 Forecasting of petroleum product consumption in transport until 2020 (BIH) ....... 43
Figure 2.43 Forecasting of petroleum product consumption in industry until 2020 (BIH)......... 43
Figure 2.44 Forecasting of petroleum product consumption in agriculture until 2020 (BIH)..... 44
Figure 2.45 Forecasting of petroleum product consumption in services until 2020 (BIH) ........ 44
Figure 2.46 Forecast of petroleum product consumption in households until 2020 (BIH)........ 45
Figure 2.47 Structure of total petroleum product consumption until 2020 (FBIH) .................... 46
Figure 2.48 Structure of final (energy) petroleum product consumption until 2020 (FBIH) ...... 46
Figure 2.49 Forecasting of petroleum product consumption in transport until 2020 (FBIH) ..... 47
Figure 2.50 Forecasting of petroleum product consumption in industry until 2020 (FBIH)....... 47
Figure 2.51 Forecasting of petroleum product consumption in agriculture until 2020 (FBIH) .. 48
Figure 2.52 Forecasting of petroleum product consumption in services until 2020 (FBIH) ...... 48
Figure 2.53 Forecast of petroleum product consumption in households until 2020 (FBIH)...... 48
Figure 2.54 Structure of total petroleum product consumption until 2020 (RS) ....................... 49
Figure 2.55 Structure of final (energy) petroleum product consumption until 2020 (RS) ......... 50

135
Figure 2.56 Forecasting of petroleum product consumption in transport until 2020 (RS) ........ 50
Figure 2.57 Forecasting of petroleum product consumption in industry until 2020 (RS).......... 51
Figure 2.58 Forecasting of petroleum product consumption in agriculture until 2020 (RS)...... 51
Figure 2.59 Forecasting of petroleum product consumption in services until 2020 (RS) ......... 52
Figure 2.60 Forecasting of petroleum product consumption in households until 2020 (RS) .... 52
Figure 2.61 Structure of total petroleum product consumption until 2020 (BD) ....................... 53
Figure 2.62 Structure of final (energy) petroleum product consumption until 2020 (BD) ......... 53
Figure 2.63 Forecasting of petroleum product consumption in transport until 2020 (BD) ........ 54
Figure 2.64 Forecasting of petroleum product consumption in industry until 2020 (BD).......... 54
Figure 2.65 Forecasting of petroleum product consumption in agriculture until 2020 (BD)...... 54
Figure 2.66 Forecasting of petroleum product consumption in services until 2020 (BD) ......... 55
Figure 2.67 Forecast of petroleum product consumption in households until 2020 (BD)......... 55
Figure 3.1 Price of unleaded 95 octane gasoline in the second half of 2005........................... 66
Figure 3.2 Price of diesel fuel in the second half of 2005........................................................ 67
Figure 3.3 Comparison of excise of diesel oil and light fuel oil in selected countries............... 70
Figure 3.4 Comparison of average net prices and retail prices of motor gasoline BMB95 in
selected countries (November 2007) ................................................................................. 71
Figure 3.5 Comparison of average net prices and retail prices of Eurodiesel in selected
countries (November 2007)................................................................................................ 71
Figure 6.1 Potential markets of regional refineries................................................................ 110
Final Report
136
11. ABBREVIATION LIST

137
ACP Africa, Caribbean, and Pacific

BAT Best Available Techniques
BD Brčko District
BIH Bosnia and Herzegovina
BMB Unleaded Motor Gasoline
CB Calculation Base
CCR Continuous Catalytic Reforming
CEFTA Central European Trade Agreement
DEA Di ethanol amine
EBRD European Bank for Reconstruction and Development
EBV Erdölbevorratungsverband
EFTA European Free Traders Association
EIHP Energy Institute Hrvoje Požar
ELG Erdöl-Lagergesellschaft GmbH
EPER European Pollutant Emission Register
Eurostat Statistical Office of the European Commission
FBIH Federation of Bosnia and Herzegovina
GSP Generalized System of Preferences
HANDA Croatian Agency for compulsory stocks of oil and petroleum products
HDS Hydrodesulfurization
IEA International Energy Agency
IEP International Energy Program
IPPC Integrated Pollution Prevention Control
ISO International Organization for Standardization
KKKSZ Kőolaj és Kőolajtermék Készletező Szövetség
MB Leaded Motor Gasoline
OECD Organization for Economic Co-operation and Development
OB Official Bulletin
OG Official Gazette
VAT Value added tax
RH Republic of Croatia
RS Republic of Srpska
SC Sale Price
SR BIH Social Republic of Bosnia and Herzegovina
ToR Terms of reference
UIO Indirect Taxation Authority
LPG Liquid Petroleum Gas
ZORD Slovenian Agency for Compulsory Oil Stocks
Final Report
138
12. ANNEX 1: CALCULATION OF COMPULSORY STOCKS
OF OIL AND PETROLEUM PRODUCTS FOR THE
PERIOD BY THE YEAR 2020 ACCORDING TO EU
LEGISLATION (ACCORDING TO SCENARIO S1-LOW
GROWTH)

139
REPUBLIC OF BOSNIA AND HERZEGOVINA
(according to scenario S1-low growth)
tons 2005 2010 2015 2020
Motor gasoline 269,800 308,757 327,983 342,964
Diesel oil 513,400 637,188 763,236 883,095
Light fuel oil 110,476 156,010 187,510 187,030
Fuel oil 118,800 191,712 264,220 349,140
LPG 28,700 36,450 50,110 68,710
Bitumen 76,700 81,320 89,290 98,850
Lubricants 17,100 18,060 19,770 22,080
Other 20,400 75,140 82,860 101,200
Total 1,160,676 1,509,982 1,791,150 2,060,180
Herzegovina (according to scenario S1-low growth)
tons 2005 2010 2015 2020
Motor gasoline 66,526 76,132 80,873 84,566
Diesel oil 126,592 157,115 188,195 217,749
Light fuel oil 27,241 38,468 46,235 46,117
Fuel oil 29,293 47,271 65,150 86,089
Total 250,958 320,304 381,975 436,275
(BIH, according to scenario S1-low growth)
3
m 2005 2010 2015 2020
Motor gasoline 87,534 100,174 106,411 111,272
Diesel oil 149,813 185,935 222,716 257,692
Light fuel oil 32,237 45,525 54,716 54,576
Fuel oil 34,062 54,967 75,756 100,104
Total 305,366 388,334 461,602 525,950
scenario S1-low growth)
tons 2005 2010 2015 2020
Motor gasoline 26,610 30,453 32,349 33,827
Fuel oil 14,647 23,636 32,575 43,045
Total 103,313 132,849 159,305 183,119
products given the structure of refinery’s processing (BIH, according to scenario S1-low
growth)
tons 2005 2010 2015 2020
Motor gasoline 28,650 36,426 43,661 49,144
Fuel oil 35,098 44,624 53,487 60,203
Final Report
140
Table 12.6 Needed stocks of crude oil and petroleum products by use of substitutes (BIH,
according to scenario S1-low growth)
tons 2005 2010 2015 2020
Motor gasoline 39,916 45,679 48,524 50,740
Fuel oil 14,647 23,636 32,575 43,045
Crude oil 165,322 210,191 251,940 283,575
Total 312,968 397,647 474,610 536,731
by crude oil (BIH, according to scenario S1-low growth)
3
m 2005 2010 2015 2020
Motor gasoline 52,521 60,104 63,847 66,763
Fuel oil 17,031 27,483 37,878 50,052
Crude oil 201,613 256,331 307,244 345,823
Total 381,426 483,834 576,630 651,383
FEDERATION OF BOSNIA AND HERZEGOVINA
tons 2005 2010 2015 2020
Motor gasoline 167,600 197,277 209,282 218,893
Diesel oil 331,000 409,670 495,490 571,520
Light fuel oil 68,800 81,660 103,590 131,740
Fuel oil 14,900 12,330 12,300 13,000
LPG 22,100 27,720 33,870 44,100
Bitumen 39,200 41,200 45,500 49,800
Lubricants 3,700 3,430 3,800 4,200
Other 19,600 24,040 26,160 28,910
Total 671,400 801,760 935,120 1,068,090
and Herzegovina (according to scenario S1-low growth)
tons 2005 2010 2015 2020
Motor gasoline 41,326 48,644 51,604 53,974
Diesel oil 81,616 101,015 122,176 140,923
Light fuel oil 16,964 20,135 25,543 32,484
Fuel oil 3,674 3,040 3,033 3,205
Total 144,690 173,927 203,619 232,047

141
products (FBIH, according to scenario S1-low growth)
3
m 2005 2010 2015 2020
Motor gasoline 54,376 64,005 67,900 71,018
Diesel oil 96,588 132,914 160,757 185,425
Light fuel oil 20,076 23,829 30,228 38,442
Fuel oil 4,272 3,535 3,527 3,727
Total 176,772 225,576 263,908 300,342
tons 2005 2010 2015 2020
Motor gasoline 16,530 19,457 20,642 21,589
Fuel oil 1,837 1,520 1,516 1,603
Total 58,244 69,875 81,751 93,139
products given the structure of refinery’s processing (FBIH, according to scenario S1-low
growth)
tons 2005 2010 2015 2020
Motor gasoline 18,360 22,563 27,512 32,296
Fuel oil 22,492 27,641 33,703 39,564
tons 2005 2010 2015 2020
Motor gasoline 24,796 29,186 30,962 32,384
Fuel oil 1,837 1,520 1,516 1,603
Crude oil 105,944 130,199 158,752 186,358
Total 192,391 234,251 280,620 325,266
product substitution by crude oil (FBIH, according to scenario S1-low growth)
3
m 2005 2010 2015 2020
Motor gasoline 32,626 38,403 40,740 42,611
Fuel oil 2,136 1,768 1,763 1,864
Crude oil 129,200 158,779 193,600 227,266
Total 234,836 285,836 341,990 396,024
Final Report
142
REPUBLIC OF SRPSKA
tons 2005 2010 2015 2020
Motor gasoline 96,800 105,150 111,177 115,366
Diesel oil 172,900 216,148 254,710 296,790
Light fuel oil 39,476 71,680 81,100 52,340
Fuel oil 102,500 177,480 250,050 334,390
LPG 5,900 7,850 15,180 23,350
Bitumen 36,000 38,490 41,990 47,070
Lubricants 13,100 14,300 15,600 17,480
Other 800 51,100 56,700 72,290
Total 468,300 683,110 827,550 960,260
tons 2005 2010 2015 2020
Motor gasoline 23,868 25,927 27,414 28,446
Diesel oil 42,633 53,297 62,805 73,181
Light fuel oil 9,734 17,675 19,997 12,906
Fuel oil 25,274 43,762 61,656 82,452
Total 101,706 140,886 172,129 197,277
products (RS, according to scenario S1-low growth)
3
m 2005 2010 2015 2020
Motor gasoline 31,406 34,115 36,070 37,429
Diesel oil 50,453 70,127 82,638 96,291
Light fuel oil 11,519 20,917 23,665 15,273
Fuel oil 29,388 50,886 71,693 95,875
Total 123,026 176,311 214,372 245,214
tons 2005 2010 2015 2020
Motor gasoline 9,547 10,371 10,965 11,379
Fuel oil 12,637 21,881 30,828 41,226
Total 43,210 60,730 75,017 87,156
products given the structure of refinery’s processing (RS, according to scenario S1-low
growth)
tons 2005 2010 2015 2020
Motor gasoline 9,753 13,218 15,421 16,033
Fuel oil 11,948 16,193 18,892 19,641

143
tons 2005 2010 2015 2020
Motor gasoline 14,321 15,556 16,448 17,068
Fuel oil 12,637 21,881 30,828 41,226
Crude oil 56,278 76,272 88,987 92,517
Total 114,774 156,427 186,099 202,638
product substitution by crude oil (RS, according to scenario S1-low growth)
3
m 2005 2010 2015 2020
Motor gasoline 18,844 20,469 21,642 22,458
Fuel oil 14,694 25,443 35,847 47,937
Crude oil 68,632 93,015 108,521 112,825
Total 139,509 189,498 225,007 244,578
THE BRČKO DISTRICT
S1-low growth)
tons 2005 2010 2015 2020
Motor gasoline 5,400 6,330 7,524 8,705
Diesel oil 9,500 11,370 13,036 14,785
Light fuel oil 2,200 2,670 2,820 2,950
Fuel oil 1,400 1,902 1,870 1,750
LPG 700 880 1,060 1,260
Bitumen 1,500 1,630 1,800 1,980
Lubricants 300 330 370 400
Other 0 0 0 0
Total 21,000 25,112 28,480 31,830
tons 2005 2010 2015 2020
Motor gasoline 1 332 1 561 1 855 2 146
Diesel oil 2 342 2 804 3 214 3 646
Fuel oil 345 469 461 432
Total 4 562 5 492 6 226 6 951
Final Report
144
products (BD, according to scenario S1-low growth)
3
m 2005 2010 2015 2020
Motor gasoline 1,752 2,054 2,441 2,824
Diesel oil 2,772 3,689 4,229 4,797
Fuel oil 401 545 536 502
Total 5,568 7,067 8,030 8,984
tons 2005 2010 2015 2020
Fuel oil 173 234 231 216
Total 1,859 2,244 2,537 2,824
products given the structure of refinery’s processing (BD, according to scenario S1-low
growth)
tons 2005 2010 2015 2020
Fuel oil 658 790 892 998
tons 2005 2010 2015 2020
Motor gasoline 799 936 1,113 1,288
Fuel oil 173 234 231 216
Crude oil 3,100 3,720 4,202 4,700
Total 5,803 6,969 7,891 8,827
product substitution by crude oil (BD, according to scenario S1-low growth)
3
m 2005 2010 2015 2020
Motor gasoline 1,051 1,232 1,465 1,695
Fuel oil 201 273 268 251
Crude oil 3,781 4,537 5,124 5,731
Total 7,081 8,500 9,633 10,782

145
Final Report
146
13. ANNEX 2: CALCULATION OF COMPULSORY STOCKS
OF OIL AND PETROLEUM PRODUCTS FOR THE
PERIOD BY THE YEAR 2020 ACCORDING TO EU
LEGISLATION (ACCORDING TO SCENARIO S3-
SUSTAINABLE)

147
REPUBLIC OF BOSNIA AND HERZEGOVINA
(according to scenario S3-sustainable)
tons 2005 2010 2015 2020
Motor gasoline 269,800 299,861 312,679 325,932
Diesel oil 513,400 645,248 790,993 924,910
Light fuel oil 110,476 155,831 173,820 141,038
Fuel oil 118,800 187,825 267,874 351,086
LPG 28,700 43,919 61,253 78,680
Bitumen 76,700 85,049 97,766 112,480
Lubricants 17,100 6,242 7,256 8,341
Other 20,400 88,990 100,420 122,650
Total 1,160,676 1,519,678 1,820,519 2,075,676
Herzegovina (according to scenario S3-sustainable)
tons 2005 2010 2015 2020
Motor gasoline 66,526 73,938 77,099 80,367
Diesel oil 126,592 159,102 195,039 228,060
Light fuel oil 27,241 38,424 42,860 34,776
Fuel oil 29,293 46,313 66,051 86,569
Total 250,958 319,433 383,135 432,376
(BIH, according to scenario S3-sustainable)
3
m 2005 2010 2015 2020
Motor gasoline 87,534 97,287 101,446 105,746
Diesel oil 149,813 188,287 230,816 269,893
Light fuel oil 32,237 45,472 50,722 41,156
Fuel oil 34,062 53,852 76,804 100,662
Total 305,366 387,077 462,531 520,882
scenario S3-sustainable)
tons 2005 2010 2015 2020
Motor gasoline 26,610 29,575 30,840 32,147
Fuel oil 14,647 23,157 33,026 43,285
Total 103,313 132,405 159,859 181,607
products given the structure of refinery’s processing (BIH, according to scenario S3-
sustainable)
tons 2005 2010 2015 2020
Motor gasoline 28,650 36,788 44,307 48,952
Fuel oil 35,098 45,067 54,278 59,968
Final Report
148
Table 13.6 Needed stocks of crude oil and petroleum products by use of substitutes BIH,
according to scenario S3-sustainable)
tons 2005 2010 2015 2020
Motor gasoline 39,916 44,363 46,259 48,220
Fuel oil 14,647 23,157 33,026 43,285
Crude oil 165,322 212,280 255,668 282,468
Total 312,968 399,308 478,944 533,237
by crude oil (BIH, according to scenario S3-sustainable)
3
m 2005 2010 2015 2020
Motor gasoline 52,521 58,372 60,868 63,447
Fuel oil 17,031 26,926 38,402 50,331
Crude oil 201,613 258,878 311,790 344,473
Total 381,426 485,739 581,629 646,936
FEDERATION OF BOSNIA AND HERZEGOVINA
tons 2005 2010 2015 2020
Motor gasoline 167,600 189,570 199,710 209,630
Diesel oil 331,000 409,098 510,078 606,232
Light fuel oil 68,800 87,300 102,040 97,910
Fuel oil 14,900 7,930 13,090 19,990
LPG 22,100 32,020 43,940 52,650
Bitumen 39,200 43,140 49,630 57,100
Lubricants 3,700 3,590 4,140 4,760
Other 19,600 25,170 28,950 33,300
Total 671,400 803,600 958,950 1,090,880
and Herzegovina (according to scenario S3-sustainable)
tons 2005 2010 2015 2020
Motor gasoline 41,326 46,743 49,244 51,690
Diesel oil 81,616 100,873 125,773 149,482
Light fuel oil 16,964 21,526 25,161 24,142
Fuel oil 3,674 1,955 3,228 4,929
Total 144,690 172,524 205,222 232,538

149
products (FBIH, according to scenario S3-sustainable)
3
m 2005 2010 2015 2020
Motor gasoline 54,376 61,504 64,794 68,013
Diesel oil 96,588 132,728 165,490 196,687
Light fuel oil 20,076 25,475 29,776 28,571
Fuel oil 4,272 2,274 3,753 5,731
Total 176,772 223,668 265,965 301,717
tons 2005 2010 2015 2020
Motor gasoline 16,530 18,697 19,697 20,676
Fuel oil 1,837 978 1,614 2,465
Total 58,244 69,205 82,412 93,508
products given the structure of refinery’s processing (FBIH, according to scenario S3-
sustainable)
tons 2005 2010 2015 2020
Motor gasoline 18,360 22,796 28,110 32,336
Fuel oil 22,492 27,926 34,436 39,614
tons 2005 2010 2015 2020
Motor gasoline 24,796 28,046 29,546 31,014
Fuel oil 1,837 978 1,614 2,465
Crude oil 105,944 131,542 162,207 186,592
Total 192,391 234,860 285,017 325,622
product substitution by crude oil (FBIH, according to scenario S3-sustainable)
3
m 2005 2010 2015 2020
Motor gasoline 32,626 36,903 38,876 40,808
Fuel oil 2,136 1,137 1,877 2,866
Crude oil 129,200 160,417 197,813 227,551
Total 234,836 286,492 347,173 396,320
Final Report
150
REPUBLIC OF SRPSKA
tons 2005 2010 2015 2020
Motor gasoline 96,800 104,060 105,810 108,860
Diesel oil 172,900 224,429 266,534 302,549
Light fuel oil 39,476 66,070 69,140 40,300
Fuel oil 102,500 178,520 253,190 329,340
LPG 5,900 11,000 16,200 24,650
Bitumen 36,000 40,190 46,230 53,180
Lubricants 13,100 2,300 2,640 3,040
Other 800 63,820 71,470 89,350
Total 468,300 691,320 832,300 952,520
tons 2005 2010 2015 2020
Motor gasoline 23,868 25,659 26,090 26,842
Diesel oil 42,633 55,339 65,721 74,601
Light fuel oil 9,734 16,291 17,048 9,937
Fuel oil 25,274 44,019 62,430 81,207
Total 101,706 141,537 171,557 192,896
products (RS, according to scenario S3-sustainable)
3
m 2005 2010 2015 2020
Motor gasoline 31,406 33,761 34,329 35,319
Diesel oil 50,453 72,814 86,475 98,159
Light fuel oil 11,519 19,280 20,175 11,760
Fuel oil 29,388 51,184 72,594 94,427
Total 123,026 177,311 213,889 240,030
tons 2005 2010 2015 2020
Motor gasoline 9,547 10,263 10,436 10,737
Fuel oil 12,637 22,009 31,215 40,604
Total 43,210 61,017 74,866 85,279
products given the structure of refinery’s processing (RS, according to scenario S3-
sustainable)
tons 2005 2010 2015 2020
Motor gasoline 9,753 13,341 15,415 15,745
Fuel oil 11,948 16,343 18,884 19,288

151
tons 2005 2010 2015 2020
Motor gasoline 14,321 15,395 15,654 16,105
Fuel oil 12,637 22,009 31,215 40,604
Crude oil 56,278 76,980 88,951 90,852
Total 114,774 157,500 185,642 198,469
product substitution by crude oil (RS, according to scenario S3-sustainable)
3
m 2005 2010 2015 2020
Motor gasoline 18,844 20,257 20,597 21,191
Fuel oil 14,694 25,592 36,297 47,213
Crude oil 68,632 93,878 108,477 110,796
Total 139,509 190,770 224,353 239,471
THE BRČKO DISTRICT
S3-sustainable)
tons 2005 2010 2015 2020
Motor gasoline 5,400 6,231 7,159 7,442
Diesel oil 9,500 11,721 14,381 16,129
Light fuel oil 2,200 2,461 2,640 2,828
Fuel oil 1,400 1,375 1,594 1,756
LPG 700 899 1,113 1,380
Bitumen 1,500 1,719 1,906 2,200
Lubricants 300 352 476 541
Other 0 0 0 0
Total 21,000 24,758 29,269 32,276
tons 2005 2010 2015 2020
Motor gasoline 1,332 1,536 1,765 1,835
Diesel oil 2,342 2,890 3,546 3,977
Fuel oil 345 339 393 433
Total 4,562 5,372 6,355 6,942
Final Report
152
products (BD, according to scenario S3-sustainable)
3
m 2005 2010 2015 2020
Motor gasoline 1,752 2,022 2,323 2,414
Diesel oil 2,772 3,803 4,666 5,233
Fuel oil 401 394 457 503
Total 5,568 6,937 8,216 8,976
tons 2005 2010 2015 2020
Fuel oil 173 170 197 216
Total 1,859 2,183 2,581 2,820
products given the structure of refinery’s processing (BD, according to scenario S3-
sustainable)
tons 2005 2010 2015 2020
Fuel oil 658 798 958 1,066
tons 2005 2010 2015 2020
Motor gasoline 799 922 1,059 1,101
Fuel oil 173 170 197 216
Crude oil 3,100 3,758 4,510 5,023
Total 5,803 6,948 8,284 9,146
product substitution by crude oil (BD, according to scenario S3-sustainable)
3
m 2005 2010 2015 2020
Motor gasoline 1,051 1,213 1,394 1,449
Fuel oil 201 197 229 252
Crude oil 3,781 4,583 5,501 6,126
Total 7,081 8,476 10,103 11,146

153
Module 1 - Energy Reserves, Production, Consumption and Trade
Module 2 - Electricity Demand
Module 3 - Power Generation
Module 4 - Power Transmission and Dispatching
Module 5 - Power Distribution
Module 6 - Power Sector Restructuring and Regulatory Framework
Module 7 - Assistance to Socially Vulnerable electricity Consumers
Module 8 - Coal Mining
Module 9 - District heating
Module 10 - Natural gas
Module 11 - Petroleum
Module 12 - Demand Management, Energy Conservation and Renewable Energy
Module 13 - Environment
Module 14 - Investment Plan and Financing Options

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Module 11 – Petroleum

Project title: Energy Sector Study in BIH

Project number: BHP3-EES-TEPRP-Q-04/05 WB

Country: Bosnia and Herzegovina

WB Consultant: The Consortium:

Energy Institute Hrvoje Požar, Croatia

Economics Institute Banjaluka, BIH

Mining Institute Tuzla, BIH

Contact persons: Haris Boko Davor Bajs

Telephone: ++ 385 1 6326 165 ++385 1 6326 102

Fax: ++ 385 1 6040 599 ++ 385 1 6040 599

e-mail: hboko@eihp.hr dbajs@eihp.hr

Date of Report: March 31st 2008

THIRD ELECTRIC POWER RECONSTRUCTION PROJECT: ESSBIH

THIRD ELECTRIC POWER RECONSTRUCTION PROJECT: ESSBIH

THIRD ELECTRIC POWER RECONSTRUCTION PROJECT: ESSBIH

THIRD ELECTRIC POWER RECONSTRUCTION PROJECT: ESSBIH

THIRD ELECTRIC POWER RECONSTRUCTION PROJECT: ESSBIH

THIRD ELECTRIC POWER RECONSTRUCTION PROJECT: ESSBIH

2.1. Bosanski Brod Oil Refinery

2.1.1. Configuration of old line and production potentials

Unit 01 – Atmospheric and vacuum distillation unit

Unit 02 – Atmospheric distillation unit

Unit 03 – Vacuum distillation unit

Unit 04 – Gasoline platforming unit

Unit 06 – Hydrogen production unit (Lummus)

Unit 07 – LPG Recovery unit

Unit 08 – Gasoline Merox unit

Unit 09 – LPG Merox unit

THIRD ELECTRIC POWER RECONSTRUCTION PROJECT: ESSBIH

2.1.2. Configuration of new line and production potentials

Unit 31 – Atmospheric and vacuum distillation unit (9.100 tons/day)

Unit 32 – HDS (Hydrodesulphurization), stabilization and splitter of peak gasoline (2,275

Unit 34 – Kerosene HDS unit (Hydrodesulphurization) (307 tons/day)

Unit 35 – Gas oil HDS unit (Hydrodesulphurization) (1,474 tons/day)

Unit 36 – Amine scrubbing of dry gas unit (76 tons/day)

Unit 38 –Sulfur recovery unit (84 tons/day)

Unit 39 – Treatment of residual acid gases unit (60 tons/day)

Unit 41 – Propane deasphaltisation of vacuum residual unit (625 tons/day)

Unit 42 – Bitumen blowing unit (350 tons/day)

Unit 05 – Hydrocracking (1 076 tons/day)

Unit 06 – Hydrogen production (35 tons/day)

THIRD ELECTRIC POWER RECONSTRUCTION PROJECT: ESSBIH

THIRD ELECTRIC POWER RECONSTRUCTION PROJECT: ESSBIH

Table 2.5 Output and sale of products by markets in 2005

Figure 2.2 Total sales in 2005 by markets

Source: Foreign Trade Chamber of Bosnia and Herzegovina

Figure 2.3 Product sales by markets in the period 2000 – 2005

THIRD ELECTRIC POWER RECONSTRUCTION PROJECT: ESSBIH

2.2. Modriča Lube Refinery

THIRD ELECTRIC POWER RECONSTRUCTION PROJECT: ESSBIH

2.3. Petrol products market in Bosnia and Herzegovina

2.3.1. Import and export of petroleum products

1200 Import of oil derivates Export of oil derivates

Source: Council of Competition BIH

THIRD ELECTRIC POWER RECONSTRUCTION PROJECT: ESSBIH

2.3.2. Overview of petroleum product consumption in Bosnia and

THIRD ELECTRIC POWER RECONSTRUCTION PROJECT: ESSBIH

Zone 1 Una-Sana 12,948.3 5,729.4 31,077.1 0.0 49,754,9

Diesel fuel consumption per 100

THIRD ELECTRIC POWER RECONSTRUCTION PROJECT: ESSBIH

Households Services Industry Total