ČAPPOCzech Association of Petroleum Industry and Trade

NOIA Meeting Bratislava 2015

Retail market in Czech Republic

# FS 2010 2011 2012 2013 2014

public 3 672 3 717 3 728 3 745 3 792

thereof FS with more products 2 675 2 702 2 745 2 762 2 782

limited access 293 397 472 573 614

non-public 2 626 2 576 2 590 2 600 2 607

Total 6 591 6 690 6 790 6 918 7 013

FS offering biofuels

# FS public limited access non-public Total

Fuel B30 233 27 40 300

Fuel B100 110 18 58 186

Fuel E85 189 0 1 190

Source: Ministry of Industry and Trade

Concentration in refineries and retail

Benzina 340

OMV 215

Shell 176

Eurooil 191

PAP-OIL 125

AGIP 124Lukoil 44

Slovnaft 25

after acquisitions (since 2012) 318 FS controlled by Slovnaft

Retail: six biggest retailers in ČR

Refineries: (Česká rafinérská)2005 Unipetrol (PKN Orlen) 50,2%, ENI 16,6%, Conoco 16,6%,

SHELL 16,6%2007 Unipetrol 50,2%, ENI 33,2%, SHELL 16,6%2014 Unipetrol 66,8%, ENI 33,2%2015 Unipetrol 100% (acquisition not finished yet)

Petroleum Products Supply

Source: Czech Statistical Office, data in 1000 Metric Tons

2 0

92

2 0

55

2 0

12

2 0

98

2 0

19

2 0

38

1 8

58

1 7

91

1 6

69

1 5

70

1 5

77

3 2

58 3

707

3 8

60

4 0

72

4 0

37

4 0

98

3 9

80

4 0

75

4 0

88

4 1

38

4 3

59

0

500

1 000

1 500

2 000

2 500

3 000

3 500

4 000

4 500

5 000

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Gasoline

Diesel

BiofuelsThe legislationClimate Protection Act (2012)• volume obligation: a minimum of 4.1% bio-component in petrol,

6% bio-components in diesel per calendar year. It can be performed by admixing of highly concentrated bio-components

• emission obligation: to reduce emissions by 2% to 31.12.2014 (fulfilled), by 4 % to 31.12.2017 – difficult to achieve and assuming an increase in the proportion of highly concentrated bio-components, by 6% to 31.12.2020 – unrealistic

Excise Duty Act• to 30.6.2015 (notification to EC in progress) providing significant

tax relief for highly concentrated biofuels • based on „Multi-annual national program of biofuels promotion

2015-2020" the Excise Duty Act is to be amended to cater for continued tax support of the biofuels; adoption of this proposal by the parliament is at risk though

Grey zoneFraud in the field of value added tax• carousel fraud in estimation amount of 5-8 billion. CZK per year (185-

290 million EUR) in 2009 -2013, the competitive environment threat• introduction of deposit of 20 million CZK (0.75 mil. EUR) and

other legislative measures led to reduction of number of distributors from approx. 1800 to approx. 160, this type of fraud almost ceased. Deposit challenged by the Constitutional Court, the Parliament has discussed an amendment to the Act.

• support for implementation of the reverse charge for fuels Fraud in the area of excise duty• fraudulent company rapidly increasing trading volumes in excess of

the established guarantee, thereafter the company liable to pay excise duty ceases to operate/exist. From 1.1.2015 more stringent conditions for the operation of tax warehouses and increased cash collateral from 100 mil. CZK (3,7 mil. EUR) to 1 500 mil CZK. (55,5 mil. EUR).

• False declaration of specific mineral oils as diesel upon imports. Since 1.1.2015 a register of subjects dealing with special mineral oils is in place; in addition, such trade/transport must be reported 24 hours in advance.

Grey zone IIFraud in the area of biofuels• sale of fuels without bio-components during the year (price

advantages), at the end of the year, the company becomes unavailable and avoids paying penalties for failure to comply with bio obligations

It should be addressed by an amendment to the Climate Protection Act (more precise definition of B100 use, bio obligations fulfillment for the quarter a minimum of 70%). The amendment dealt simultaneously with the variation of excise duty rates for highly concentrated biofuels (see above), its further negotiations is at risk

Emergency oil stocksThe legislationThe Act on emergency oil stocks, … (1999)• stocks are hold and funded by the State and their replacement is

done through the State Material Reserves Administration• stocks a minimum 90 days, generally crude oil reserves around 70

days and products approx. 20 days• stocks based primarily in the Czech Republic – company MERO

stocks crude oil, company ČEPRO products. Both companies are state-owned.

• long-term plan is to increase the reserves for 120 days and the involvement of the private sector in their funding - under consideration