News

MERO ČR will build a new crude oil storage tank in the central tank farm in Nelahozeves

Kralupy nad Vltavou, 18th of October 2016 - The joint stock company MERO ČR has begun preparatory work to build a new storage tank with a volume of 125,000 m3 in the central crude oil tank farm (CTR) in Nelahozeves near Kralupy nad Vltavou.

Among other things, the need for new storage tank follows from new legislation regarding the protection of water resources, and enables the company to improve operating conditions for supplying Czech refineries and storage of strategic crude oil reserves in the Czech Republic.

The intention to announce a tender for the processor of design documentation for the new storage tank has been approved by the Supervisory Board. Extension of the CTR in Nelahozeves at an estimated cost of 650 million CZK will be financed from the company’s own resources. The estimated construction time is 36 months from the date of commencement of the project preparation.

Regarding the construction of the new storage facility, Stanislav Bruna, General Director of MERO ČR, says: “After a long time, it is a major infrastructure investment related to the Czech system of crude oil transport. Although the main reason is stricter environmental legislation, the construction of the new storage tank means an increase in the stability and flexibility of transportation and storage of crude oil, which will enable us to better deal with the problems of a similar nature to the long-term shutdown of Czech refineries in the recent past.”

Otakar Krejsa, Director of Sales and Administration of MERO ČR, also adds: “Last but not least, there is the possibility of using this capacity for commercial purposes under favorable conditions.”


The International Association of Oil Transporters has a new member

Kralupy nad Vltavou, 30th of May 2016 - The fifth meeting of the International Association of Oil Transporters (IAOT) was held in Bratislava on the 25th and 26th of May. The meeting was also attended by a Czech representative - MERO ČR. The participants praised the existing cooperation and planned its further deepening. The Chinese company CNCP became the newest member.

IAOT (the International Association of Oil Transporters) bringing together major national crude oil transporters was initiated by Mero ČR in December 2013. A joint initiative with the Slovak Transpetrol and Russian Transneft resulted in the first Annual General Assembly of IAOT, which was held in Prague last year.

“The Association is a platform for exchanging technical experience, and especially to ensure the continuity and stability of oil supplies”, said Stanislav Bruna, Chairman and CEO of Mero ČR. The informal exchange of experience and information is a key activity of the organization.

The Chinese state oil company China National Petroleum Company (CNCP), represented by Vice-President of PetroChina Huang Weihe, became a new member of IAOT. In addition to MERO, the current members include Transpetrol, Transneft and MOL (Hungary), Gomeltransneft (Belarus) and KazTransOil (Kazakhstan), and Ukrtransnafta (Ukraine) is also involved in the activities of the Association. The Caspian crude oil pipeline consortium, whose shareholders are Chevron (USA), Mobile (USA) and Eni (Italy) has observer status.

From the joint meeting it follows that the Association wants to continue to increase its membership in the future. Pemex (Mexico) and Petrobras (Brazil) have been invited to become members, and other European crude oil companies have also expressed an interest in becoming members.

The meeting also revealed that cooperation between the members is working well, therefore the intention is to further deepen these joint activities. Emphasis is placed not only on the technical aspects of ensuring the transport of crude oil, but also on the general improvement of the energy security of the countries involved in international transportation and supply of crude oil.

The result of discussions was the formation of expert committees, whose activities will focus, for example, on an assessment and analysis of the parameters of crude oil transport, but also on the perspectives of existing or new pipeline routes, as well as the technical aspects of cooperation among the entities involved in their transport. The subject of debate was also other attributes of crude oil transport.


The IKL crude oil pipeline has already transported 50 000 000 tons of crude oil to the Czech Republic

Kralupy nad Vltavou, 18 April 2016 – The fifty millionth ton of crude oil has been supplied by the IKL oil pipeline to the Czech Republic on Saturday, 16 April. In this year, the IKL pipeline will celebrate the 20th anniversary of its operation.

The jubilee supply has flown to the Central Crude Oil Tank Farm in Nelahozeves, Central Bohemia. It is a mixture of crude oils CPC, Azeri Light and Azeri Light Supsa from crude oil deposits in Kazakhstan and Azerbaijan that were transported in tankers to the port of Trieste, Italy. After mixing, crude oil mixture was supplied by TAL pipeline to Vohburg, Germany, and from there by the IKL oil pipeline to the Czech Republic. This oil delivery from Vohburg to Nelahozeves took approximately 15 days.

„Considering environmental protection, crude oil transportation by pipelines is the safest and the most reliable mode of transport. If we wanted to carry fifty million tons of crude oil from IKL to the Czech Republic, we would need approximately 1 000 000 tank wagons or even up to 2 000 000 tank trucks, which is extremely difficult to do, says Ondřej Šmolík, Head of Operation Division of MERO Company.

IKL crude oil pipeline is almost the only one system to supply the refinery in Kralupy nad Vltavou. Since reconstruction of its technology in 2001, this refinery has been processing only crude oil with lower content of sulphur than Russian crude oil, transported by Druzhba oil pipeline. IKL was put into operation 20 years ago, as an alternative oil transport pipeline to Druzhba.

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Unipetrol and Mero agreed on transportation tariffs

Litvínov, April 7, 2016 – Representatives of Česká rafinérská and MERO ČR have signed an amendment concerning transportation tariffs to the existing Contract on storage and transportation of crude oil via the IKL and Družba pipelines from January 2016. The amendment is effective from 1 April 2016. The annual value of the contracts exceeds one billion crowns.

„ Thanks to very intensive negotiations and willingness of both parties to strike a deal in recent months, we managed to set a new form of tariffs. I would like to appreciate a proactive approach of MERO.” said Marek Świtajewski, CEO of Unipetrol. „The signed amendment to the contract is a part of a broader agreement defining terms of cooperation of both companies on the crude oil supply to the Czech republic and this way strengthens resource security of domestic economy,“ added Marek Świtajewski.

„„The agreement on the amount of tariffs is an important point after long negotiations related to setting a standard contractual relationship between both companies. The final phase of negotiations strengthened mutual trust and I perceive it as a basis for future cooperation on joint projects, “said Stanislav Bruna, chairman of the board of MERO.

Česká rafinérská, which is 100 percent owned by Unipetrol, and MERO ČR signed the Contract on storage and transportation of crude oil via the IKL and Družba pipeline in January, thereby long-term conditions on the crude oil transportation to the Czech republic were set. The amendment to this contract on the volume of transportation tariffs has now been signed as well as the contract on arrangement of crude oil transportation via the TAL pipeline, where MERO ČR plays there the role of middleman. Estimated annual value of both contracts is more than one billion crowns. Unipetrol assumes significant savings, which level depends on the volume of transported crude oil. The contracts were concluded for an indefinite period of time. The negotiations between both parties have already started in 2010.

Finally, Unipetrol RPA and MERO ČR have signed a memorandum of a possible further intensification of the cooperation in oil storage.

The Družba pipeline is used to transport oil from the Russian Federation to the Litvínov refinery, owned by Česká rafinérská. The IKL pipeline is used to supply the Kralupy nad Vltavou refinery. The total processing capacity of both refineries amounts to about 8.7 million tons of crude oil per year.


The IKL crude oil pipeline: 20 years ago opened the way for the Czech Republic to receive oil from west.

Kralupy nad Vltavou, 23rd of March 2016

The IKL crude oil pipeline 20 years ago connected the Czech Republic to Western European pipeline network, which significantly reduced the country’s dependence on supplies from Russia via the Druzhba crude oil pipeline. Construction of the IKL crude oil pipeline including the tank farm in Vohburg was completed in record time: a nearly 350 km long route and four tanks with a total volume of 200,000 m3 were completed in less than two years.

Twenty years ago, on the 25th of March 1996, MERO CR, a.s. officially launched the operation of the IKL crude oil pipeline, which was the most modern European pipeline of the time. The pipeline system with a length of 347 km connected the Central Crude Oil Tank Farm in Nelahozeves with the Crude Oil Tank Farm in the Bavarian town of Vohburg, where oil travels from the Italian port of Trieste. After more than 30 years, The Czech Republic gained an alternative supply route capable of replacing the Druzhba eastern crude oil pipeline.

“The Czech Republic gained assurance through the IKL crude oil pipeline that in the case of problems with the Druzhba crude oil pipeline it would not be left dry. The prudence of this decision has been confirmed several times. Supply from Russia has been disrupted several times due to technical, political and economic reasons, e.g. in 2007, 2008 and 2012. Thanks to the IKL crude oil pipeline the Czech Republic has managed to cope without any problems”, says the General Director of MERO ČR Stanislav Bruna.

The idea to become independent from the oil transported through the Druzhba crude oil pipeline began to be actively developed in 1990. The period of political and economic change and the consequent problems of Russian mining companies led to concerns about the reliability of supplies from Russia, therefore the then Czechoslovakia decided to build a modern pipeline connected to the infrastructure in Western Europe. A Czech Government Resolution dated 4th of February 1992 approved the construction of the pipeline and the Bavarian government approved the pipeline project on the 15th of February 1992.

It took over two years to process all of the regulations and standards, which were very complicated and strict particularly on the German side (for example the permitting process involved five Bavarian state ministries, six provincial offices, thirty four municipal councils, the state agency for water management, the provincial heritage office, six water management offices, two top forestry authorities, eight forestry offices, the expert organization TÜV and numerous experts on specialized issues). Nevertheless, the project was implemented in record time and trial operation began on the 9th of January 1996. The official opening ceremony for full operation took place at the central crude oil tank farm in Nelahozeves on the 25th of March 1996.

During the time of its construction the crude oil pipeline was the most modern and safest of its kind. The construction solutions, technologies and procedures used corresponded to the demanding requirements of German law e.g. the quality of welds on the pipeline was very carefully controlled and documented, the welds were examined by ultrasound and x-ray. The equipment includes a SCADA control and communications system throughout the entire length of pipeline (including in the Vohburg tank farm). Despite the technological advances of the crude oil pipeline, MERO invests roughly 50 million CZK per year into ongoing modernization.

The IKL pipeline in numbers:

  • total length: 347 km
  • annual capacity: 11,5 milionů tun
  • pipeline diameter: 711 mm
  • number of armature shafts: 54
  • flow velocity of oil in the pipeline: 0,5–1,1 m/s
  • volume of oil transported in 20 years: 49 153 699 tun
  • number of different types of transported oil: 32

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Czech Druzhba celebrates half a century, has transported 293 million tons of crude oil to refineries

Kralupy nad Vltavou, 21st of December 2015

Construction of the Druzhba crude oil pipeline began in December 1960 in the Siberian city of Samara as an ambitious international project. In 1965, the pipeline was extended to the Czech Litvínov. During the 50 years of its existence it has brought to Czech refineries 293 million tons of oil. Due to comprehensive modernization it can serve for decades to come.

The Druzhba crude oil pipeline is the oldest functioning pipeline in the Czech Republic. The local section measuring 357 km (including branches and then doubling 504 km). The crude oil pipeline crosses 15,330 parcels with 26,991 owners from Hodonín in Moravian to Litvinov in Northern Bohemia. Until 1989, Druzhba transported 18 million tons per year to Czechoslovakia, now the figure is around 4 million tons per year (along with the IKL crude oil pipeline the total volume in recent years amounts to approximately 7 million tons per year).

Since 1994, the Czech section of the Druzhba crude oil pipeline has been owned and operated by the state company MERO ČR, a.s. Between 1998 and 2003, Druzhba underwent extensive modernization (investment of approximately 1.82 billion. CZK), and MERO ČR, a.s. still invests heavily in maintenance and upgrading of the crude oil pipeline. Druzba has new control, communications and security systems comparable to those of much younger crude oil pipelines. Thanks to this specialized care Druzhba can safely transport oil for decades to come - in the world operable crude oil pipelines from the 1990s are in good condition.

Compared with other modes of transport, pipeline transportation of crude oil the safest, most environmentally-friendly and economically advantageous. For example, the volume of crude oil that arrives daily at the refinery in Litvínov would normally require approximately 310 standard rail tankers, i.e. nearly 16 trains (each with 20 wagons). In the case of road transport, this volume would have to be replaced by approximately 600 fully loaded tank trucks.

Druzhba is the longest crude oil pipeline network in the world with a length of 5,100 km, linking eight countries (Russia, Belarus, Ukraine, Poland, Germany, Slovakia, Hungary and the Czech Republic). It crosses 94 large and more than 400 smaller rivers, and over 500 railway lines and highways.

The fourth meeting of the International Association of Oil Transporters was held in Moscow

The 4th meeting of the International Association of Oil Transporters was held in Moscow between the 3rd and 5th of September 2015. Representatives of the host company Transněfť were joined by representatives of MERO, the Slovak company Transpetrol, the Hungarian company MOL, the Belarusian company Gomeltransněfť Druzhba, representatives of the Caspian Pipeline Consortium, and the Kazakh transporter KazTransOil, which was accepted as a member of the association during the meeting.

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The program included a tour of the facilities at the Transněfť plants. Company representatives were acquainted with the activities of Transněfť in the development of equipment for diagnostics of oil pipelines, and the internal inspection and cleaning of pipelines. Furthermore, the delegates visited the company OMEGA, where they were shown how optical technologies are used to detect and prevent uncontrolled impacts to the pipeline and possible oil spills.

At the meeting, which was held under the guidance of the President of the Russian company Transněfť Nikolai P. Tokarev, participants agreed, among other things, to establish a working group aimed at increasing energy efficiency and benchmarking.

During the meeting of the International Association of Oil Transporters, representatives of MERO ČR and Transpetrol signed a mutual agreement on collaboration and exchange of information during the operation of oil pipelines.

With the aim of becoming acquainted with the activities of the association, the meeting was also attended by the acting General Director of Ukrtransnafta Roman Sidorak. Members of the International Association of Oil Transporters invited the Ukrainian company to join the association.

The representatives of the members of the association in attendance also approved the intention to offer membership to oil transporters from China, Mexico and Brazil and emphasized the importance of this professional group, whose aim is active collaboration, exchange of information and the resolution of current issues in the field of oil transport.

The International Association of Oil Transporters extended with other members

The latest meeting of members of the International Association of Oil Transporters (IAOT, hereinafter referred to as the Association) and representatives of the oil transporting companies that have expressed an interest in joining the Association was held on the 23rd and 24th of April 2015.

The Association was established on the initiative of MERO ČR as a nongovernmental and nonprofit group in December 2013. A year later, the companies Transneft, Transpetrol and Gomeltransněfť, together with the founding member MERO, signed a memorandum in which they confirmed their interest in joining the Association.

Its main mission is to create a platform for the exchange of information, formulation of common opinions and positions and coordination of joint activities in areas that are closely linked with the issue of the transportation of oil and petroleum products (including joint projects) in the Eurasian territory.

On the 24th of April, in addition to the highest representatives of the three member countries i.e. the Czech transporter MERO, Russian Transneft and Slovak Transpetrol, the third meeting of the Association was attended by representatives of the Belarusian Gomeltransněft and Hungarian MOL, who have declared their interest in becoming members of the Association, as well as a senior representative of the Caspian Pipeline Consortium, which has expressed interest in observer status.

During the meeting, inter alia, a plan of the Association’s activities and selection of specialized topics for the next meeting e.g. quality and balancing of transported oil, internal pipeline inspections, systems for the prevention and detection of leaks, etc. were discussed. These are issues that are very relevant both for MERO and also for oil transporters from other countries.

The aim of the Association is also to coordinate steps related to oil transportation, information exchange and joint solutions to the issues of supplying oil via the Druzhba pipeline. Establishing personal contacts of top representatives of the participating companies can significantly assist in accelerating communication and information, e.g. in emergency situations regarding the supply of oil via the Druzhba pipeline.

The Ministry of Finance appointed new members of the Board of Directors of the MERO company.

Prague, 7th January 2015

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Firefighting exercise extinguished an oil tank fire in the Central Tank Farm

Nelahozeves, 24th September, 2014

A simulated fire in a large capacity crude oil tank was the subject of the MERO large-scale tactical exercise 2014, which took place this morning in the Central Crude Oil Tank Farm in Nelahozeves. The exercise was attended by a total of 10 fire brigades, over 20 fire engines and dozens of people from the emergency crews of several surrounding villages. During the exercise the firefighters used two special American firefighting devices.

This morning over fifty firefighters were involved in a simulated fire in a large capacity crude oil tank in Nelahozeves. According to the MERO tactical drill scenario 2014 the fire broke out after a lightning strike ignited the crude oil in the tank with a capacity of 125,000 cubic meters. Due to damage to the sprinkler system it was necessary to sound the fire alarm and call the Fire Rescue Service Unit of the Central Bohemian Region, which is equipped with the powerful Ambassador fire extinguishing equipment. Together with the Regional Operational and Information Centre, the Police of the Czech Republic and the crisis management crews from surrounding villages over 100 people were involved in the tactical exercise.

MERO has a total of 16 oil tanks at the central crude oil tank farm with a total capacity of 1.55 cubic meters. Over a million cubic meters of crude oil is stored there for the State Material Reserves. MERO is legally obliged to regularly perform large-scale tactical exercises in which it reviews whether the tank farm’s emergency plan is fully up-to-date and applicable. “The scale of our passive and active equipment for managing fires is superior to the security measures of similar crude oil stocks in Europe,” says the Director of MERO ČR Jaroslav Pantůček.

Each crude oil tank at the tank farm is equipped with flame detector and heat sensitive cables which trigger the automatic sprinkler system. This is able to completely cover the roof of the tank with special foam within three minutes. The electronic fire alarm system is connected to the tank farm’s control room as well as the dispatch office of the contracted fire rescue service unit of the company Synthos. The tank farm is also constantly monitored by CCTV and the situation is evaluated by operators in the tank farm’s control room. In total there are 23 thousand cubic meters of water and 80 thousand liters of foaming agent available at the tank farm in case of fire.

The largest foreign import of mobile firefighting equipment includes two American Ambassador monitors. These monitors were developed by the American company Williams & Fire Hazards Control particularly for fighting large fires in the refinery industry. Considering their parameters and the conditions at the central crude oil tank farm, two of these devices would be sufficient to extinguish a fire within 60 minutes. The capacity of each monitor is 3,700 to 22,700 l/min, at 7 bars.

Col. Ing. Miloš Hladík, Deputy Regional Director of the Fire Rescue Service Unit of the Central Bohemian Region for the integrated rescue system and operational management, describes the process as follows, “It is important to realize that extinguishing flammable liquid is specific in its own way. In order to extinguish the fire effectively, it is first necessary to gather enough firefighters and extinguishing agents and consequently supply the extinguishing foam to the area of the fire without disturbing the continuity”.

The aims of the exercise were to exercise the collaboration of the elements of the integrated rescue system of the Central Bohemian Region, to examine whether the external emergency plan for the central crude oil tank farm as well as the warning plan and the plan for the control the movement of people and vehicles are sufficiently up-to-date and applicable. The exercise also tested the warning of residents via the general alarm system.

MERO can now replace the Druzhba with the spare capacity of the Western European TAL crude oil pipeline

Kralupy nad Vltavou, 12th March 2014

MERO has secured an alternative transport route in the event that the political crisis in Ukraine stops the inflow of oil from Russia via the Druzhba crude oil pipeline. As one of the shareholders of the Western European TAL crude oil pipeline it has the option to use its priority rights to the free capacity of the TAL, which has the sufficient capacity to meet the needs of Czech refineries in the coming months, so that it could completely replace the Druzhba crude oil pipeline if necessary.

In the framework of the international system of early notification, MERO is in constant contact with the carrier on the southern branch of the Druzhba crude oil pipeline, via which oil from Russia flows into the Czech Republic through Slovakia and the Ukraine. “We have yet to receive any indication from our partners of a possible unplanned interruption of the Druzhba crude oil pipeline. MERO will be informed of any unexpected event along the pipeline in time to allow the situation to be immediately resolved,” says the Director General of MERO, Jaroslav Pantůček.

If the supply from the Druzhba crude oil pipeline is interrupted MERO has secured an alternative transport route for Russian oil. With the purchase of a five per cent share in the TAL transalpine crude oil pipeline, as well as MERO’s IKL crude oil pipeline, MERO has preferential rights to request spare capacity. “Due to the unpredictable situation in the Ukraine we held preliminary talks last week on a potential increase in the flow of the TAL crude oil pipeline. The agreed amount can fully replace supplies via the Druzhba crude oil pipeline, which the operation of the refinery in Litvinov is dependent on”, says Mr. Pantůček. Before purchasing shares in the TAL crude oil pipeline MERO was in a third party position whereby shareholders' requirements took priority. “As a shareholder we can now utilize the spare capacity of the TAL crude oil pipeline without restrictions. The current situation confirms our hypothesis that the purchase of shares in the TAL crude oil pipeline will again increase the security of oil supplies to the Czech Republic”, adds Mr. Pantůček.

If the supply from the Druzhba crude oil pipeline is interrupted MERO can ensure the alternative transportation of Russian oil using sea routes. Tankers will import oil from the Black Sea through the Bosphorus and Dardanelles canals and across the Adriatic Sea to the Italian port of Trieste, where it will then be transported via the TAL and IKL crude oil pipelines to Czech Republic. In addition, the central crude oil tank farm in Nelahozeves holds around one million tons of Russian oil owned by the Administration of State Material Reserves (ASMR) which can provide the refinery in Litvinov with crude oil in one to two hours. The refinery in Kralupy nad Vltavou does not handle Russian oil and can be supplied via the IKL and TAL crude oil pipelines without any problem.

In 2013, four million tons of crude oil was transported to Czech Republic via the Druzhba crude oil pipeline, the total pipeline capacity is 9,000,000 tons per year. The IKL crude oil pipeline transported 2.6 million tons of crude oil to the Czech Republic last year, and its maximum capacity is 11 million tons per year.

The Czech Republic’s strategic oil reserves are stored in the central crude oil tank farm (CTR). The CTR has a total of 16 tanks: four with a volume of 50,000 m3, six with a volume of 100,000 m3 and six with a volume of 125,000 m3. Supplies to the Administration of State Material Reserves can last for about 60 to 70 days; in total the ASMR has enough oil and petroleum for 94 days of operation.

MERO WINNING THE MAIN PRIZE in "BEST BOARD"

CIoD recognized the responsible work of executive board members, with ČEZ and MERO being the winners

Prague, 16 October 2013 - Czech Institute of Directors (CIoD) formally announced today winners in the competition for the best executive board and the best board member. While the "Best Board" prize was awarded to MERO ČR, "Best Board Member" was taken by Daniel Beneš, ČEZ Group's Chairman and CEO.

Czech Institute of Directors (CIoD) decided this year for opening for the first time competitions entitled "Best Board" and "Best Board Member". According to CIoD, activities of these people deserve recognition as well as rehabilitation in the eyes of wider audience. "Members of executive and supervisory boards serve important offices associated with great responsibilities. So far these positions were, in the eyes of majority, linked to high premiums and pejorative attitude because of assigning "tobacco shop" in state-owned corporations. Since we have been monitoring this issue in this country for over 12 years, we know that these people assume great responsibility and, after all, are liable with their private property, which is a fact that hardly someone is aware of," said Monika Zahálková, CIoD's Executive Director.

In both categories, there were about 20 companies and individuals nominated. An expert jury was assessing a number of criteria. Boards nominated for Best Board were requested to provide evidence of, in addition to at least five years of activity, results of high quality in the long run in relation to administering and managing the company, a high level of Corporate Governance and the emphasis on long-term development. This category was won by MERO ČR, public limited company, the owners and operators of the Czech portion of the Družba and IKL crude oil pipelines. "We take "Best Board" as appreciation of the long-term work of the entire company that ensures effective and reliable crude oil supplies in the Czech Republic. For instance, we successfully acquired in the last year, after years of negotiations, a property share in TAL, the West Europe's crude oil pipeline, which significantly boosts our country's safety as regards energy," said Jaroslav Pantůček, MERO ČR's CEO, adding that the prize was something that all of the roughly 115 staff members deserved.

The Best Board Member contest saw Daniel Beneš, ČEZ Group's Chairman and CEO becoming the winner. Criteria for the jury to assess in this category included, for example, the nominees' qualifications, professional, knowledge and moral pre-requisites, and long-term experience. In addition, each of the candidates had to provide evidence of having been personally beneficial to the development of Corporate Governance in the company they work.

MERO ČR ACQUIRES AN OWNERSHIP INTEREST IN THE TAL PIPELINE

Major step in ensuring the energy security of the Czech Republic Companies MERO ČR, a.s. and Shell Deutschland GmbH are pleased to announce that on the 25th of September 2012 an SPA was signed under which MERO will acquire a 5% share in companies owning and operating The Transalpine Pipeline (TAL). Signing of this contract completes the long-term process of negotiations between the two companies. In accordance with the non-disclosure agreement signed by both parties, no details concerning the contracts (including the price of the transaction and other business terms) will be made public.

By acquiring the shareholdings in TAL companies, MERO has assured energy security for the Czech Republic. The TAL pipeline presents a viable alternative in oil supplies for the Czech Republic and the acquired shareholdings further strengthen this position.

Both parties appreciate high level of professionalism throughout mutual negotiations and declare their readiness for closer cooperation in the future.

MERO ČR will become one of the participants of the TAL pipeline, a joint-venture of major European refineries and oil transporters. MERO has acquired its 5% share from Shell Deutschland Oil GmbH that has a significant shareholding in TAL. The list of participants include - ÖMV, Exxon Mobile, Ruhr Öl, ENI, BP, Conoco Philips, Petroplus and Total. Oil is transported by the pipeline from the Italian marine terminal in Trieste through the Alps to processing plants in Austria and Germany where TAL is connected to the IKL pipeline (Vohburg, Bavaria), which runs to the Central oil tank farm in Nelahozeves.

The successful transaction brings significant advantages:

- enhancement of the energy security of the Czech Republic in the field of oil supply;

- increase of the shareholder value of MERO (the company is 100% owned by the Czech state);

- MERO realizes the purchase without a need of external financing or public funds.

The strategic importance of the IKL-TAL interconnection was proven many times in the past, especially in situations when the volume of the oil supply to the Czech refineries by the Druzhba pipeline was significantly reduced for various reasons.

In 2008, the Emergency Agreement between MERO and TAL was signed after intensive discussions. This agreement enabled MERO ČR to use the free capacity of the TAL pipeline beyond the level of its long term nominations. Despite the signing, MERO stayed in a position of the so-called “third party” and it was in a less preferred position compared to the TAL shareholders - MERO did not have the flexibility to adjust the amount of the real volume of transported oil based on the current needs or use the free available capacity of the TAL pipeline at any time based on the needs of owners of the Czech refineries.

By becoming he shareholder in the TAL, the position of MERO ČR has significantly improved and in the event of any cut in supply by the Druzhba pipeline the needs of the Czech refineries will be satisfied by the TAL-IKL pipeline based on the free transportation capacity of the TAL pipeline.

“We strive to ensure the energy independence of the Czech Republic. One of the key axes is a secure supply and storage of oil. In this respect I highly appreciate the fact that through this acquisition the Czech Republic further cemented its diversified oil supply routes via Druzhba pipeline and via the IKL pipeline connected to the Transalpine pipeline TAL,“ said Martin Kuba, the Minister of Industry and Trade.

Oil supplies through the Druzhba pipeline

Kralupy nad Vltavou, 10 April 2012

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Grant Project of the ALFA programme.

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

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

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

Help to people affected by floods - MERO Raspenava

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

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Minsk agreement to enhance the safety of oil deliveries.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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


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MERO CR will build a new crude oil storage tank in the central tank farm in Nelahozeves


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