9 July 2009

Global perspectives: Russian oil company boosting refinery

By Cris Whetton

Russian oil firm Tatneft, controlled by the regional administration of the Republic of Tatarstan, wants to get $1-$1.2 billion additional financing this year for its Nizhnekamsk refinery project.

“This year, we’ve been still disbursing up to this point under the credit facility we secured last year of $2 billion to finance construction of the refinery,” said Vasily Mozgovoy, assistant to the general director. “We’re looking at raising additional capital for that. We can look at approximately $3-3.2 billion total investment into phase one by the end of this year.” The first phase of the refinery, in the Tatarstan republic east of Moscow, should have an annual capacity of 7 million metric tons. The entire refinery project includes an aromatics complex with a capacity of 151,000 metric tons a year in paraxylene, a naphtha hydrotreater with 1.1 million metric ton capacity, a kerosene hydrotreater of 500,000 metric ton capacity, and a diesel-hydrodesulphurization facility of 1.6 million metric ton capacity.

Meanwhile, Russia’s Sibir Energy said state-owned Gazpromneft has bought a 17% stake in the London-listed firm, further boosting the state’s share of Russia’s oil production. Sibir Energy, which runs the Moscow Refinery with Gazpromneft and has an oil production venture with Royal Dutch Shell in Siberia, is in the middle of a legal dispute with Shalva Chigirinsky, one of its main shareholders, and former Chief Executive Henry Cameron, after controversial real estate deals and share manipulation accusations left the company in debt. Chigirinsky and his partner Igor Kesayev own a 47% stake in Sibir, pledged as collateral to state-backed Sberbank. The Moscow city government has an 18% stake. The remaining shares are on the market.

Kazakstan state energy firm KazMunaiGas is looking to sell a stake in the Pavlodar oil refinery to Russia’s Gazprom Neft or TNK-BP. KazMunaiGas plans to buy the refinery from MangistauMunaiGas, a private oil producer, and then sell a large minority stake to a Russian company that can provide it with oil from Siberia. The Pavlodar refinery, built in Soviet times, is linked to pipelines in neighboring Russia rather than to Kazak ones. It can process up to 7.5 million metric tons of oil a year. Kazakstan produces about 70 million metric tons of oil a year and exports most of it. Its three refineries mostly serve the domestic market.

In Lithuania, a new subsidiary of the oil refinery Mazeikiu Nafta has started its activities. It will provide electrical equipment installation, servicing, maintenance, and related services. The subsidiary employs about 200 former workers of the electricity plant owned by Mazeikiu Nafta. Last year, Mazeikiu Nafta established two companies with the aim to separate the functions unrelated to oil refining. The company Paslaugos Tau provides cleaning and security services, and Mazeikiu Nafta Health Care Centre serves the company’s employees and other residents of the district.

Cris Whetton is InTech’s European correspondent.