Abstract: Concerns about climate change and the European Green Deal have brought into question the future of hydrocarbon exploration and production (E&P) in Central and Eastern European Countries (CEEC). The region has prolific offshore and onshore basins with producing oil and gas fields that despite decades of production still contain highly underexplored and largely virgin acreage. The region is also a substantial importer of hydrocarbons. This year, for example, both a new import pipeline and LNG terminal commenced operation. Meanwhile, key regional interconnectors and other infrastructure are either under construction or planning. In this presentation, I will examine how the need for energy security and reduction of energy poverty means that hydrocarbon E&P and green energy will need to co-exist. I will provide examples how the energy transition can be enabled through hydrocarbon E&P. Short Bio: George Kovacic is an energy expert specializing in market entry, energy transition, above-ground risk minimization and investment attraction. His clients include oil companies, energy consulting corporations as well as energy industry service and product providers. George also advises hydrocarbon agencies and ministries. He has achieved much success for his clients in Europe, North America and elsewhere. George has played a leading role in the launching of hydrocarbon license rounds and the establishment of successful regulatory and fiscal regimes for hydrocarbon exploration and production. His work has resulted in dozens of new market entries and has generated over a half of a billion dollars in contracts for his clients. George has an MBA High Honors from the Université Libre de Bruxelles (Solvay Business School) in Brussels, Belgium and a BA from the University of Alberta in Edmonton, Canada.

1. APPEX Global – AAPG Europe
March 1, 2021
Enabling the Energy Transition through Hydrocarbon E&P
A CEEC* perspective
GEORGE KOVACIC
*Central and Eastern European Countries

2. DISCLAIMER
All parties viewing this presentation understand
that Croscorp International Ltd. (Croscorp) is not
providing any service to any of the parties with
this presentation. Information and examples
have been presented in a simplified manner.
The environment is dynamic and the information
may no longer be accurate.
Croscorp assumes no responsibility or liability
whatsoever for any action taken by any party.
For avoidance of any doubt, all parties shall be
solely responsible for all decisions undertaken.
Parties are encouraged to conduct their own due
diligence prior to undertaking any decisions or
contact Croscorp for a consultation.
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3. The Greening of the Dinaric Karst
• Natural growth of Croatian forests
▫ 17% growth in 25 years
▫ New carbon sinks
• How the Greening of the Dinaric Karst
happened?
▫ Gas replacing wood for cooking
▫ Hydrocarbons replacing wood for heat
▫ Forest management including animal
grazing
▫ Natural forest regeneration and planting
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2020
1935
Photo Credits: Hrvatske Šume d.o.o.
Mountain Ostrovica, Croatia

4. Energy Security & Energy Poverty
• Diverse energy options ensure
Energy Security and reduce
Energy Poverty
• People/businesses migrate to the
lowest cost energy source
• Use of coal and wood for heat is
common in some CEEC urban
centers
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Photo from:www.novilist.hr/rijeka-regija/rijeka/gdje-je-zapelo-sezona-grijanja-je-pred-vratima-a-na-drva-u-rijeci-se-mora-cekati-45-dana/

5. Lowest Cost Energy Source
• Example Croatia 2020 earthquakes:
▫ Using unsafe chimneys
▫ People given free electric heaters
▫ Electricity deemed too expensive
▫ Free electricity was provided to
impacted households until end of
March, 2021
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Photo from: https://dnevnik.hr/galerija/vijesti/hrvatska/mlinac-nazalost-nakon-poplave-smo-stalno-s-petrinjom-u-kontaktu-tako-smo-i-sada-dali-sve-nase-snage-na-raspolaganje-i-ostajemo-ovdje-do-daljnjega---637203.html/62024058/637203

6. Comparison example – Nord Stream 2
Nord Stream 2 Details: under construction
• Annual capacity of 55 billion m³ (1.9 tcf)
▫ Capacity - 22 times Croatia LNG
Why Germany wants Nord Stream 2:
• Reliable, efficient and stable supply of energy
• Lowest cost energy – subsidy to industry and
residents
• First inline – Energy Security
• Help Germany move away from nuclear and
coal – decarbonization by moving to gas.
Photo from: Bloomberg article, “Nord Stream 2 Urgency Diminishes” – October 13, 2020
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7. Comparison example – German offshore oil production
Mittelplate details: producing oil
• Produce oil offshore in a National Park
• Seven km from the shore, in shallow water
• Produced 146 million barrels of oil
Why Germany produces their national resources:
• Reliable, efficient and stable supply of energy
• Lower cost – subsidy to industry and residents
• High paying technical jobs
• Tax revenue
• Strong domestic oil and gas industry
• Oil and gas service industry plus export of
their products and services
• Stimulation of other industries – hot houses,
fertilizer, petrochemical and others
Photo from: Wikipedia Mittelplate post
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8. Transition through hydrocarbon E&P
Opposite sides of the same coin
• Carbon Capture, Utilization and
Storage (CCUS)
• Replace imports with regional E&P
• Complete gaps & utilize existing
hydrocarbon infrastructure
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• Address offshore hydrocarbon
seeps and spills
• Hydrogen production
• Re-purpose infrastructure

9. Carbon Capture, Utilization and Storage (CCUS)
• CCUS is an Enhanced Oil Recovery
(EOR) method
 ~500K bpd using CO2 EOR
 Nearly 70% CO2 captured from
O&G operations
• Complementary - store carbon
and increase production of
hydrocarbons
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IEA - “Reaching net zero will be virtually
impossible without CCUS”

10. Replace imports with regional E&P
• Most of CEEC is a huge O&G importer
• Prolific offshore and onshore basins
• Highly underexplored and largely
virgin acreage
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11. Deloitte Study – Romania example
• Estimated Future Economic effects:
▫ Tens of thousand of jobs
▫ Contribute over 7 billion USD annually
▫ Achieved without any new government
spending
• I predict same can be multiplied many
times throughout CEEC
▫ Economic spillover – greenhouses …
3
Tables from: “The contribution of Black Sea oil and gas projects
to the development of the Romanian economy”, Deloitte, May 2018

12. Complete gaps and utilize existing
hydrocarbon infrastructure
• Multi-tiered Europe
▫ Infrastructure being built
▫ Have not yet enjoyed benefits
• Will increase efficiencies, diversify
supply options …
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13. Address offshore seeps and spills
• Offshore seeps
▫ Core natural oil and gas seeps
▫ Reduce carbon and pollution
▫ Help identify prospects
• Offshore spills
▫ According to EC study, illegal oil
dumps regularly occur
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Photo from: ftp://ftp.ingv.it/pub/paola.vannoli/Pubblicazioni/Pubblicazioni_JCR_altre/Etiope_etal%202014_MPG.pdf
Map from: hrcak.srce.hr/file/224030
Radar images of the Adriatic oil slicks. Slicks correlate with main shipping routes

14. Hydrogen Production
• Produce hydrogen in situ from
decommissioned or marginal fields
▫ Carbon trapped in reservoir and
hydrogen produced
• Re-purpose existing natural gas
infrastructure for hydrogen
production and transportation
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IEA - “Hydrogen is almost entirely supplied
from natural gas and coal today.”

15. Re-Purpose Infrastructure
• Re-purposed decommissioned
offshore platforms for
wind energy, aquaculture,
tourism …
• Re-purpose unused pipelines for
hydrogen and CO2 transportation
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Screenshot from: https://www.linkedin.com/posts/in-vr-oil-gas_anps-updated-regulations-are-opening-new-activity-6734193239655624704-tUL8 :

16. US example – Santa Barbara, Long Beach
• The Santa Barbara and Los Angeles
regions produce over 100,000 barrels
of offshore oil per day.
• Tourism, fishing and offshore oil
production successfully co-exist and
stimulate each other
Photo from: https://en.wikipedia.org/wiki/THUMS_Islands
Island Grissom, THUMS
Islands, one of the four oil
production islands
off Long Beach, California
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17. Greek example – Kavala Bay
• Oil production in the Aegean Sea
• Co-existence of oil production, tourism
and fishing
• Oil production stimulates tourism and
fishing
Photos from: Energean LinkedIn posts; Croatian Hydrocarbon Agency, https://www.linkedin.com/company/1816748/ & https://blog.discovergreece.com/en/2017/03/ten-10-out-of-this-world-destinations-in-greece
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18. Objective - address energy poverty and climate concerns
• Develop natural resources
and energy infrastructure
• Lower cost energy & increase competition
• Decreased import dependency
• Energy security
• Revenue and jobs
• Decreased dependence on wood and coal
• Stimulate carbon capture, utilization and
storage
• Stimulate in situ hydrogen production
• Protect the environment
• Extend life of current assets
• Re-purposes infrastructure
• Reduce carbon footprint
• Access EU Transition Funds
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19. For assistance with market entry, energy transition, above-
ground risk minimization and investment attraction contact:
George Kovacic
+1 604 420 2262
info@croscorp.com
THANK YOU
linkedin.com/in/georgekovacic