NIS & ATOMENERGOPROEKT JOINT PROJECTFOR

MINING AND PROCESSING OF OIL SHALEON

ALEKSINAC DEPOSIT (SERBIA)

October 2012, Belgrade, Serbia 1

Agenda

1. Introduction2. NIS overview3. ATOMENERGOPROEKT overview4. TTU-Ltd overview5. Benefits of joint participation 6. References in the field of oil shale7. Current projects8. UTT-3000 technology overview9. Technology comparison10. UTT-3000 advantages11. Aleksinac project overview12. UWB sounding for geological prospecting & exploration

2

Introduction

• Global reserves of oil shale (in terms of oil) are many times larger than those of conventional oil.

• Estimates of global deposits range from 2.8 to 3.3 trillion barrels• Estimates of Serbia deposits are 1.5 million barrels

3

NIS• One of the largest vertically integrated companies for the

production of crude oil and gas in Southeast Europe

• The company for exploration, production and refining of crude oil and natural gas as well as sales and distribution of a wide range of petroleum products

• It possesses:

• Crude oil and natural gas production

• Refineries in Pancevo and Novi Sad

• Own retail network

• Energy business

• Oilfield Services

• Petrochemistry

Business center in Novi Sad 4

Indicator 2011Revenues, bln RSD 187,05EBITDA, bln RSD 52,39Employees 9076*

* Including NIS first chance

ATOMENERGOPROEKT

• OJSC "Saint-Petersburg Research and Design Institute ATOMENERGOPROEKT“ (JSC" SPbAEP ") established on September 1, 1929.

• 118 power plants, including 18 nuclear power plants in 19 countries were built and put into operation based on “SPbAEP” designs.

• The Institute has been involved in the oil shale industry since 1950s, has designed 3 oil shale fired power plants, and all existing UTT-3000 and UTT-500

• ATOMENERGOPROEKT today has:

• more than 80 years of successful operation• about 1800 highly experienced specialists• projects successfully implemented in 19 countries• certified quality management system ISO 9001

JSC “SPbAEP” head office 5

TTU-Ltd

• TTU Ltd – company possessing method patents and installations for processing oil shale by solid heat carrier (UTT)

• Established by specialists in the field of oil shale processing in 2006, reorganized in 2009

• Goal of the company – development and distribution of technology for the processing of low-calorific solid fuels by high speed pyrolysis method Galoter

• Number of patents – 24• Number of inventors involved – 37

6

Benefits of joint participation

• NIS refining complex includes two individual locations: Pancevo and Novi Sad which are suitable for processing shale oil

• ATOMENERGOPROEKT has ultimate experience and exclusive rights to the design of UTT-3000 installations

• TTU-Ltd is the owner of patents and technology provider

7

References of ATOMENERGOPROEKT

Ilmarine Factory

Tallinn, 1950-53 UTT-50 facility with bunker-type and drum-type reactors

50 t oil shale / day (R&D)

Kivioili Kivioili, 1953 R&D UTT-200 facility 200 t / day

Kivioili Kivioili, 1963 R&D UTT-500 facility 500 t / day

Oil Factory Narva, 1975-1980 Two commercial UTT-3000 facilities

6000 t / day

Power Technological Plant

Slantsy, 1994-2006 Project 3xUTT-3000 9000 t / day

Viru Keemia Group

Kohtla Yarve, 2006 Project 1xUTT-3000 3000 t / day

Oil shale based Power & Technological Facilities

Oil shale based Power Facilities

8

Estonian PP, Narva, 1969-73,1610 MWe, 84 MWt

9Designed by ATOMENERGOPOEKT

Oil Factory 2хUTT-3000, Narva, 1980-84, 6660 tpd oil shale

10 Today known as Enefit-140, designed by ATOMENERGOPOEKT

UТТ-3000 in Kohtla Jarve, VKG Oil AS

11 Today known as Petroter , designed by ATOMENERGOPOEKT

ATOMENERGOPROEKT Current projects

Nuclear Power Plants• 2xVVER-1200 Leningradskaya NPP-2 Saint Petersburg, Russia.• 2xVVER-1200 Baltic NPP Kaliningrad, Russia.• FN-800 Beloyarskaya NPP, Ekaterinburg, Russia.• 4xVVER-1000 Tianwan NPP, Tianwan, China.• VVER-1000 Busher NPP, Iran.• VVER-440 Kola NPP, Russia

12

ATOMENERGOPROEKT Current projects

Oil Shale Projects• 18xUTT 3000 El Lajun, Jordan INCOSIN • 24xUTT 3000 Al Atarat, Jordan INCOSIN• 24xUTT 3000 Bayer, Jordan INTER RAO UES• 2xUTT 3000 Sultani, Jordan JOSECO• 8xUTT 3000 Bayer, Jordan GLOBAL OIL SHALE Co.• 2xUTT 3000 Mishor Rotem, Israel INTER RAO UES• 2xUTT 3000 Mishor Rotem, Israel GLOBAL OIL SHALE Co.• 24xUTT 3000 Sangruntau, Uzbekistan UZBEKNEFTEGAZ• 24xUTT 3000 Tichara, Myanmar SNOG Ltd.• 8xUTT 3000 Tarfaya, Morocco ZONA ENGINIRIE S.A.R.L.

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The Essence of Processing Thermal decomposition of kerogen is the base of all oil shale processing methods.

Maximum liquid yield can be achieved at the end point of thermobitumen decomposition .

The higher the temperature the more coke and gas are formed. Heavy oil in conditions of tough permeability of fractured rock or in coarse fragmented shale is also condensed and polymerized forming coke and gas and lowering liquid yield.

100%

50%

75%

25%

0% 300 350 450 0C 400

Oil fraction <200 0

Gas

Oil fraction 200-350 0

Oil fraction >350 0

Thermobitumen

Coke

Kerogen

Water

The point of total decomposition of thermobitumen varies for different kinds of oil shale as per temperature as well as per yield of coke which depends on H/C ratio. This is why in-situ heating process will never exceed energy efficiency 40-50% leaving carbon and heavy oil in-situ.

14

The Essence of Processing Thermal decomposition of kerogen is the base of all oil shale processing methods.

Maximum liquid yield can be achieved at the end point of thermobitumen decomposition .

The higher the temperature the more coke and gas are formed. Heavy oil in conditions of tough permeability of fractured rock or in coarse fragmented shale is also condensed and polymerized forming coke and gas and lowering liquid yield.

100%

50%

75%

25%

0% 300 350 450 0C 400

Oil fraction <200 0

Gas

Oil fraction 200-350 0

Oil fraction >350 0

Thermobitumen

Coke

Kerogen

Water

The point of total decomposition of thermobitumen varies for different kinds of oil shale as per temperature as well as per yield of coke which depends on H/C ratio. This is why in-situ heating process will never exceed energy efficiency 40-50% leaving carbon and heavy oil in-situ.

15

UТТ-3000 Flowsheet

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Balance schemeRaw Oil Shale2,500 thsnd t

(500 thsnd t.o.e.)

Gas petrol22 thsnd t

(21.7 thsnd t.o.e.)

Gas101.7 thsnd t

(82.5 thsnd t.o.e.)

Steam900 thsnd t

(56.7 thsnd t.o.e.)

Heavy oil139.9 thsnd t

(120.1 thsnd t.o.e.)

Medium oil117.5 thsnd t

(106.7 thsnd t.o.e.)

Diesel fraction29.6 thsnd t

(28.9 thsnd t.o.e.)

Petrol fraction40.5 thsnd t

(39.8 thsnd t.o.e.)

UTT-3000 installation outlet456.4 thsnd t.o.e.

Efficiency 91,3%

Synthetic oil350 thsnd t

(317.3 thsnd t.o.e.)

Electricity374.2 mln kWh

(32.2 thsnd t.o.e.)

Electricity203.6 mln kWh

(17.5 thsnd t.o.e.)

Steam and heat100,040 Gcal

(10 thsnd t.o.e.)

Efficiency:On commodity products -80.0 %General (incl. own needs)-85.5%

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Other known technologiesShell ICPChevron Crush

ATP Processor

18

Other known technologies

19

Lurghi-Lurgas

Petrosix

Kiviter / Fushun

Process IGT

Union B

Technology comparison

20

Final result show how much share of in-situ oil shale energy goes to the profit forming:

PROFIT = Final result * Oil Shale Resource Energy in BOE * Oil Price Source: “RESOURCE- Evaluation Model for Choice of Oil Shale Mining and Processing Technologies “, 28 th Oil Shale Symposium, October 13-17, 2008

UТТ-3000 Advantages12.3.1.1. Comparison of participants of shale oil production market Enefit ATP UTT Capacity, bopd 38 000 15 000 30 000 Unit capacity, tph 280 500 139 Number of units 10 2 24 Service life, year

30 (assumpted)

30 (assumpted)

30 proved

CAPEX, $ mln 5 900 1 800 1 900 CAPEX per unit, $ mln 590 900 79 CAPEX per bopd 155 263 120 000 63 333 CAPEX $/bbl 14,2 11,0 5,8 OPEX $/bbl

23,0 assumpted

23,0 stated

20,0 stated

Maturity of technology, years of units work

0 new

~ 1 on oil shale

59 three UTT-3000

Oil Shale, tpd 53 760 19 200 64 051 Capacity Ratio 0,8 0,8 0,8 Yield of oil bbl/t 0,7 0,8 0,5 Products Syncrude, bopd 38 000 15 000 pyrolysis distillates, bopd 30 000 electricity, MWh/day 8400 960 14400 sulfur, tpd 387 153 tiophenes, tpd 95 Prices Syncrude, $/bbl 70 70 Pyrodistillates, $/bbl 60 Electricity, S/MWh 48 48 48 Sulfur, $/t 600 600 600 Tiophenes, S/t 3000 3000 3000 Revenue, $ per day Syncrude 2 660 000 1 050 000 - Pyrodistillates - - 1 800 000 Electricity 403 200 46 080 691 200 Sulfur 232 013 91 584 - Tiophenes - - 286 200 Total revenue, $ per day 3 295 213 1 187 664 2 777 400 OPEX+CAPEX 1 412 813 509 384 773 516 Profit, $ per day 1 882 400 678 280 2 003 884 Payback period, year 8,6 7,3 2,6 Payback (Oil + Electricity only), year 9,8 8,4 3,0 Profitability of investments, % annual 12 14 38 Share in production, % 46% 18% 36%

21Source: Marketing researches by TTU Ltd submitted to NRA, Jordan, 2010

Opportunities and Prospects• The opportunity of processing of hydrocarbonaceous wastes in UTT – used

tires (up to 10% wt), oil soaked soils (20-25 % from volume of oil shale), tars, cakes, etc, will provide an additional output of liquid distillates

• Shale oil can be used as the activator for processing the heavy oil residues (tar, malta, black oils). In thermal processes of heavy oil residue processing (visbreaking and thermocracking), application of oil shale activators increases the yield of light products from 20% up to 60%, and in hydrogenization processes (hydrocracking) the yield of light products for one cycle increases from 50% up to 90%, thus process speed is 2 times higher, and working pressure is 2 times lower.

• The UTT installations can be added with oil&gas fired power plants with the capacity of up to 100 МW per unit. The opportunity of regulation of an output of liquid and gaseous products from UTT over a wide range allows the plant to be quickly switched from fuel production to electric power generation and to serve as peak smoothing power generation facility.

• The UTT complex can be added with cement works - for the production of cement it is possible to use cement clinker produced from cyclonic shale ashes, limestone, fuel and energy.

• UTT can be added with melting oven to melt ash – it will enable production of clinker and extract metals from ash. 22

Environmental

23

Subject of Impact

Source Contaminants Note, concentration

Atmosphere Chimneys Dust Meets to EU norms

SO2 Meets to EU norms

CO Meets to EU norms

CO2 Meets to EU norms

Nox None

Hydrocarbons Within allowed limits for refineries

Soil Ash stock Ash Inert, solid, non-dusting

Overburden FIlled back to exhausted space of quarry and reclaimed

Water No leakages into environment

Analogue: Operating plant Petroter based on UTT-3000 located in confines of Kohtla Jarve town in European Union.

Standard EE 0579981-NJ ST 9:2005 "Oil Factory Products"

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Products Specs Application

Heavy oil 1040 kg/m3 Used for asphalt in road construction

Heavy-medium fraction

1035-1050 kg/m3 Used as fuel oil in big boilers and power plants

Total oil Grades A, B, C

Pour point -10..-40 ºС1010-890 kg/m3

Used in boilers of any capacity, does not require heating in winter time

Shale fuel oilGrades L-1, L-2, L-3

880-1010 kg/m3 Used as light fuel oil in boilers, in gas turbines, for marine oil production

Semi-coke gas 1.15 kg/m3 Used in boilers

Aleksinac oil shale deposit• The exploration area is located in the south-eastern part of Serbia.• Potential reserves (resources) of oil shale on the territory under

exploration Aleksinac estimated at 2 billion tons.• Organic content up to 16.6% and an average oil content of 8.95%.

25Source: Project of geological exploration of Aleksinac deposit, NIS, 2010

Aleksinac oil shale deposit

qOil shale

Brown coal

26Source: Project of geological exploration of Alecsinac deposit, NIS, 2010

Aleksinac oil shale deposit

Geological section of the Aleksinac deposit

27Source: Project of geological exploration of Aleksinac deposit, NIS, 2010

Structure of proposed production

28

Mining Oil Shale5 mln tpy

Overburden Filling back 5 - 7 mln tpy

Processing Oil Shale 5 mln tpy

Processing 5 mln tpy

Shale Oil 0,5 mln tpy

Quarry Retorting unit Distillation Unit

Gas 0,5 mln tpy

&Recovered

Heat115,000 toe

Electric power1,600 mln kW-h (200 MW)

NIS refineriesNIS pipeline,

railroad

Turbine House

Petrol, Diesel oil, Fuel Oil, Asphalt

Shale oil as activator for heavy oil processing

• Shale oil can be used as the activator for processing the heavy oil residues (tar, malta, black oils, thick crude) in oil refineries.

• In thermal processing of the heavy oil residues (visbreaking and thermo-cracking) application of oil shale activators increases the yield of light products from 20% up to 60%, and

• in hydrogenization processes (hydrocracking) the yield of light products for one cycle increases from 50% up to 90%, thus speed of process is 2 times higher, and working pressure is 2 times lower.

• Proper industrial test runs were made in Angarsk petrochemical plant.

• Use of 500 thousand ton of shale oil as activator in NIS refineries for processing 5 mln ton of crude oil will increase yield of petrol and diesel oil.

29

Proximate economic evaluation of Aleksinac project5 mln tpy (8,600 bopd)

30

UWB sounding for further geological prospecting & exploration

Elaborated method of impulse Ultra Wide Band Electro Magnetic Sounding (UWB) allows to find the oil shale layers and distinguish them by rich and poor grades. Risky costs of prospecting works are ten times lower in comparison to drilling.

31

UWB sounding for further geological prospecting & exploration

32

UWB sounding for further geological prospecting & exploration

33

Conclusion

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The Republic of Serbia, in partnership with NIS, Atomenergoproekt and TTU-Ltd possess all necessary resources, capacities, experience, funds, skills and access to technology required to implement the project of development of oil shale starting from Aleksinac deposit, and expanding the experience to other deposits, and to include oil shale into the energy balance, being friendly to the environment and for the benefit of the Serbian people.

Thank you!

October 2012, Belgrade, Serbia 35