Belarus modernizing major oil refineries in bid for higher revenues

Belarus modernizing major oil refineries in bid for higher revenues

The President criticized the work of Belarusian oil refining on June 1. For Belarus this is a strategic area. But in 2016, the oil balance went into negative territory. In addition to objective global causes, there are many internal problems. Among the most obvious are the prolonged periods of modernization of Belarusian refineries.

Alexander Lukashenko, President of Belarus:
Oil refining is turning into an unprofitable industry, which needs to be modernized, while earlier it was a flagship of the economy. I want to remind you that a lot of money has been invested in upgrading and modernizing the refinery, and there is still no due payback. Of course, the impact of the global conjuncture affected the decline in the efficiency of our work. Oil prices fell 2.5 times, or even more. However, a negative role was also played by miscalculations in determining the development strategy of the industry. The main question is: what are these miscalculations? Incompetent preparation of projects and wrong distribution of resources led to an increase in the cost and timing of construction (regarding some projects this figure is up to five years). It is doubtful that we will finally complete the modernization of the oil refineries by 2019 as declared.

In general, the world is now experiencing an energy crisis. Experts predict that oil prices will continue to decline. This year, the price of black gold will be at best $60 per barrel. The recent meeting of OPEC did not add optimism to markets. In the US, the number of drilling rigs has updated a two-year maximum. Overseas, businesses continue to reduce the extraction of black gold.

Vitaly Petrushkin, Candidate of Economic Sciences:
Here we need to carefully calculate logistics and the economical side of possible oil supplies from different countries. Belarus has this experience already. We once bought oil in Venezuela, relatively recently did we buy oil in Iran.

Belarusian oil products are mainly sold to Europe. Our country exports dark petroleum products, for example, fuel oil and bitumen, which are used for processing. The share of light oil products - and this is gasoline, kerosene, diesel - is small. Although these are products that are marked as those having high added value.

Vitaly Petrushkin:
We are right saying that we must modernize technologies at our refineries. If we can do this in a fairly short time, we will have a deep oil refining depth and a high quality of oil products.

The depth of oil refining in Belarus is at the level of 75%. Mozyr is already building a new complex, which will increase the depth of processing to a record 90%. But will the project will be commissioned on time? This is a matter of strategic planning. And here, according to the President, not everything is so smooth.

Alexander Lukashenko:
When appointing new directors of Naftan and Mozyr Oil Refinery, they were given clear tasks for developing action programs in the real situation. Therefore, we will also hear out their reports. Enough time has passed to get to the heart of the matter. I warned them that they would not be able to use old methods of work (and I see this intention from your current proposals).

Once again I want to emphasize: we have failed many modernization projects. I am not going to tolerate such a situation with modernization. If you start arguing with me here as usual, you will go from here without your briefcases. I warn you: I will not allow the President's decisions to be devalued, disavowed and failed. I cannot allow that. This applies to everything from the Orsha issue to today's conversation. I need an objective analysis and report. If you are guilty, you will be blamed. What is the fault? If you did screw up, then you failed. We need to know the reasons. Everything needs to be brief, specific and clear. We must work out a plan of action for taking the refineries out of this bad situation.

Now three large enterprises of the petrochemical block are implementing large investment projects. For example, Grodno Azot is soon planning to start the construction of a new nitrogen complex. There are no visible reasons for deviating from the schedule. To successfully complete the projects that have already begun you need to save and generally keep your hand on the pulse.

Igor Lyashenko, chairman of the concern Belneftekhim:
The head of state drew attention to the fact that enterprises should work in austerity regime not allowing any overspending in administrative expenses. He demanded effective economic activity not permitting the non-negotiable use of any kinds of resources. It goes without saying that we should be responsible for the acceptance of construction works.

Modernization of the industry is in full swing. In 2016 alone, five new facilities were built at Mozyr Oil Refinery. Now they are building a hydrocracking complex for heavy oil residues. Modernization at the plant should end in 2019, that is, on time. This is a fundamental requirement of the President.

Vitaly Pavlov, General Director of the Mozyr Oil Refinery:
The complex for hydrocracking of heavy oil residues is designed to increase the processing depth to 90% and increase the yield of light oil products to 65-66%.

Another large-scale project is being implemented at Naftan. Taking part in the meeting with the President was the new Naftan director, Alexander Demidov, who took office only a few months ago. In order to successfully complete the modernization, internal resources should be put into use first of all.

Alexander Demidov, General Director of JSC Naftan:
The delayed coking complex, which allows you to increase the depth to 90%, will make it possible to work profitably. The task is complex. But at stake is not only the enterprise but the country's economy too. There is no other option for today. It is clear that 90% depends on the team.

The head of state will visit the renovated enterprises as they finish modernization. After all, the result of successful modernization is not only profit. At stake are large financial investments and - not least - the welfare of thousands of employees of city-forming enterprises.