The Government Plans To Construct Another Oil Refinery In Odesa.

Prime Minister Yuliya Tymoshenko announced these plans at a press conference yesterday, however, the draft decree has yet to be signed by the President. The refinery is projected to have a throughput of 10 mln mt per year and its construction is expected to take 1.5 years. The project is needed to diversify oil product supplies to the Ukrainian market. It will be customized to refine Kazakh oil and mainly produce light oil products, such as gasoline and diesel. According to Tymoshenko, the refinery will be created as a private company, with an investor selected through a special tender. Concorde Capital: At the moment, there are six oil refineries and one gas processing plant able to produce gasoline in Ukraine. The refineries? capacities are underutilized but the government did not succeed in reaching an agreement to up production with the largest refineries, which are controlled by Russian oil majors. This lack of production periodically leads to price crises in the oil products market. While Tymoshenko?s endeavor may be justified from a national security standpoint, it is not clear how economically feasible it is. One of the existing refineries is already located in Odesa and is owned by Russia?s LukOil. Recently, LukOil?s president Vagit Alekperov revealed the company’s plans to invest a total of USD 500 mln in its Odesa refinery to conduct a complete overhaul of its capacities. This may mean that the refinery will be idle from July to September 2005 which may have an adverse affect on Ukrainian oil products market.