The decrease in production by the national oil refinery companies was owed to the government’s regulations driving the cut in prices on the domestic market at the expense of import stimulation. At the same time many oil refinery companies managed not only to survive but to go on with production, making a cutback sensibly.
“The strategic model to supply the oil products for the developing Ukrainian market is an optimum import and own production balance”, comments Sergei Lizunov, President of TNK Commerce, Ukrainian TNK-BP Division. In the middle of August the company focusing on the refinery facilities projects implementation at Lisichansk Oil Refinery Plant announced its plans to stop production of gasoline A-80 in favor of more demanded A-92 and A-95. In the opinion of Mr. Lizunov, “in one year and a half the notion of A-80 should become obsolete”. According to RBK Ukraine, the consumption of this type of gasoline has been decreasing in the country by one third per year in recent years.
The decision of the company can be considered a timely one. It is assumed that the sales of oil products that do not meet Euro-4 standards (including low-octane gasoline) will not be allowed starting from 2011. The move forward, encouraging the shaping of the quality fuel market, was possible due to larger high-octane types of gasoline share of the product balance thanks to optimization of octanizing unit performance.
Lisichansk refinery (LINIK) is considered the newest in Ukraine: its first units were launched on 17 October 1976. This facility is graded as fuel-oriented refinery with deep refining and petrochemical segment. Initially the refinery was initially designed to provide oil products for Ukraine’s industrial eastern regions, as well as to the southern regions of Russia. In Soviet times, the refinery was the largest in Eastern Europe, boasting 23.7 mln tpa of oil refinery run in 1991.
However, in early independence years the throughput began dwindling rapidly (general trend throughout the former USSR), reaching the historic minimum of 531,300 tpa in 1999 due to slashed oil supplies from Russia. The situation on the dying facility changed rapidly with the change of the owner – in 2000 Ukraine’s government inked the dotted line, selling the control stake in the refinery (67.41% to Russia’s TNK. After Russia’s TNK and British Petroleum merged into TNK-BP, Lisichansk refinery (LINOS) became the new company’s asset in Ukraine. Subsequently Open JSC LINOS was transformed into Closed JSC LINIK.
Several issues had to be solved if the company was to sustain severe competition from the Russian and Belarusian refiners:
– boosting the refining depth and process flow flexibility, expanding the production range;
– ensuring compliance of refinery’s products to European quality regulations in the context of constant tightening of EU standards;
– implementation of a large-scale program targeting boosting environmental safety of the products and environment protection;
– ensuring compliance to industrial safety standards (at the time the refinery was known for high depreciation of the equipment and high accident