Characteristic

NAFTA a.s. is a Slovak private joint stock company. It is a mother company with headquarters situated in Gbely, west Slovakia, only 80 kilometres (km) from the Slovak capital Bratislava. The main business activities are:

• geology exploration and survey;
• drilling and workover job;
• domestic crude oil and gas production;
• operation of underground gas storage facilities and renting storage capacity to domestic as well as foreign customers;
• mechanical engineering and manufacturing;
• civil engineering and assembly works.

Company structure

NAFTA a.s. is currently undergoing major restructuring, which will result in a holding company where NAFTA a.s. will remain a mother company and its previous five enterprises will be transferred into 100 per cent daughter companies with rented assets.

Previous enterprises	New daughter companies
Gas production and underground gas storage plant in Malacky	NAFTA GAS, a.s., Malacky Fax: +421 703 723 550
Exploration and production plant in Michalovce	NAFTA VYCHOD, a.s., Michalovce Fax: +421 946 420 307
Exploration and production plant in Gbely	NAFTA ZAHORIE, a.s., Gbely Fax: +421 801 921 113
Central workshops in Gbely	NAFTA STROJ, a.s., Gbely Fax: +421 801 921 421
Engineering and supplying plant in Gbely	NAFTA ID, a.s., Gbely Fax: +421 703 712 567

In addition, NAFTA a.s. has already established two 100 per cent daughter companies, a trading company NAFTA TRADE a.s., Bratislava and a leasing company NAFTARSKA Leasingova, a.s., Bratislava.

NAFTA has its origins at the beginning of this century and was founded as an oil exploration and production company.

Drilling started on 10 October 1913 as part of the Austria Hungarian Monarchy drilling works. Meanwhile, crude oil was found on 13 January 1914, a daily withdrawal rate reaching 15 tonnes, with the depths of reservoirs ranging from 140 to 260 metres.

The establishment of Czechoslovakia in 1918 also meant the founding of a state owned company, Statne Naftove Doly. In the post-war period the company was nationalised and production was modernised.

In 1971 the company first entered the business of gas storage through the construction of an underground storage complex at Lab.

NAFTA a.s. was privatised in the first wave of privatisation and incorporated on 1 April 1992.

Shareholders structure

Executive Board of Directors

Business activities

NAFTA TRADE a.s., Bratislava

• trading with own hydrocarbon products and storage capacities;
• other trading activities include continuous supplying of material and equipment required for the business activities of individual daughter companies;
• commercial cooperation with foreign partners, focusing on contracting new gas capacities, drilling works and mechanical engineering products.

NAFTARSKA Leasingova, a.s., Bratislova

• providing equipment leasing operations.

NAFTA GAS a.s., Malacky

• operation of underground gas storage, storing of imported gas.

Gas storage facilities

The storage capacity of UGS complex Lab 1-4 exceeds demand of the Slovak and Czech Republics, and is prepared to support pipeline systems which supply to different parts of western, southern and central Europe with gas. This conclusion is based on evaluations of those projects which are currently in progress, a capacity estimation, reservoir and hydrodynamic characteristics, pressure relations between individual reservoirs, and pressure characteristics of the pipeline systems.

NAFTA ZAHORIE, a.s., Gbely
NAFTA VYCHOD, a.s., Michalovce

• on-shore drilling and completion of exploration and production well for domestic and foreign customers;
• domestic hydrocarbons productlon performed by own drilling rigs;
• drilling and completion of injection withdrawal wells for UGS;
• workover jobs;
• geological reservoir engineering service, field development works, hydrocarbons modification and treating;
• drilling and completion of geothermal wells;
• drilling and completion of methane production wells in coal seams.

NAFTA currently owns and operates the following drilling rigs:

• F 100;
• F 200 DH;
• 320 3DH;
• DIRR 558;
• DIRR 5505;
• DIRR 7005;
• BIRR 8005;
• and developed own mobile drilling rig GVS 3070 and GVS 1060.

Domestic production in 1996

Oil and gas fields are located in the Vienna Basin and the east Slovakia Neogen.

Previous drilling activities abroad

Work in progress

NAFTA STROJ, a.s., Gbely

• engineering, manufacturing, maintenance and repairing of equipment used for exploration and production.

NAFTA is entitled to use the API monogram Specification 7 on manufactured products (Kelly, tool - joints, drill - steam subs, drill collars), the API monogram Specification 5 CT on tubing, and was granted a TUV certificate in accordance with AD - Merkblatt HPO for pressure vessels manufacturing and AD Merkblatt WO/TRD 100 for flanges.

In 1997 this enterprise ensured a complete overhaul of their own drilling rigs, including the machining of equipment required for drilling works in Kazakhstan and by the NAFTA-Danube Association.

Export in 1997 totalled 40.5 mil. SKK. Products were exported to the Czech Republic, Austria, the USA and Scotland. Cooperation with the last partner, FMC company from Scotland, gives prospects for machining in 1998.

Mechanical engineering programme

• pressure technological equipment for treatment and storing of gaseous and liquid hydrocarbons as well as the drilling operations;
• equipment for underground as well as on ground well completion;
• pressure elements and equipment;
• pressure vessels (up to ID 3 000 mm, maximum volume 100 m³) in accordance with TUV certificate;
• non-pressure vessels;
• special equipment which complies with strict ecological requirements;
• general mechanical engineering production;
• spare parts for drilling and production equipment;
• special parts for drilling equipment.

NAFTA ID, a.s., Gbely

• designing, engineering and constructing UGS, gathering centres, pipelines, cable networks, gas regulation stations and other gas storage facilities.

In 1997 the activity of this plant was focused on the construction of the UGS Lab 4, especially its technology for the treatment of injected and withdrawn gas, including pipelines, linking pipelines and cable networks. To realise construction, assembly and technology works, the plant primarily used their own know how and personnel.

Future prospects

1998 is a year of internal changes in the company organisation scheme, which will positively influence the continuity of company adaptation to the new market situation, as well as provide basic assumption for stable future development.

As the size of NAFTA underground storage facilities grew, and as finding oil and gas sources became domestically more difficult, gas storage developed into the largest and most profitable part of the business. Therefore, smooth development of gas storing capacities is the focus of future programme activities. The estimated investment expenses for the UGS projects in Lab (the 5th stage of UGS complex), Gajary, and Sered, amounts to more than 20 bn SKK, with 1/3 of expenses expected to be covered by production and operation capacities. The remainder has to be negotiated with financially sound partners and potential customers.

International activities will focus on field development, drilling and production works in the Kyrymyltyk field, the western part of Kazakhstan where NAFTA owns a mining licence. NAFTA has been an exclusive supplier of drilling works and there is a chance that the company will contribute to the supply of oil gathering and treatment technology.

Another planned business activity is to keep or even increase domestic gas production. There are two basic options, new gas sources, or intensification of those which are currently being used. Both of them are financially demanding and their development depends on their own capital accumulation.

Mechanical engineering, civil engineering and assembly works are closely tied to the development of the above mentioned activities, focusing on the construction of UGS, gathering centres, regulation stations, pipeline connections and the implementation of the energy saving programme. All of these should become more effective and competitive in the future.

Income statements for the previous three years