Surgutneftegaz seeks funding for Kirishi hydrocracker

MOSCOW´┐ŻVladimir Bogdanov, president of Russia's Surgutneftegaz, held a series of meetings in London recently with potential investors to discuss a project to build a hydrocracker at the Kirishinefteorgsintez refinery near St. Petersburg.

Surgutneftegaz is seeking $600-800 million in loans for the project. Some of these funds may be supplied in the form of Western technology, says the firm. Tender plans have already been drawn up and potential suppliers of processing technology identified, according to the company.

The Kirishi refinery is owned 100% by Surgutneftegaz and is Russia's fifth-largest oil processing plant, handling 16 million tonnes/year. The low-complexity plant was built in 1966 and was designed to produce light petroleum products. This strategy proved ineffective under market conditions, prompting the hydrocracker project.

With the addition of a hydrocracker, the refinery's depth of conversion would reach 75% from 50-55%, and residual fuel oil production would fall to 4 million tonnes/year from 7-8 million tonnes.

Surgutneftegaz expects the plant to achieve annual profits of $250 million after project completion.

Meanwhile, Surgutneftegaz has expressed interest in participating in Belarus's downstream sector, according to Russian press reports. The company, Russia's third largest oil producer, appears to be interested in upgrading the Novopolotsk refinery, also known as Naftan.

Belarus plans to privatize Naftan, owned 100% by state firm Belnaftokhim, and Moscow's Itera Group has said it would be willing to take a controlling stake in the plant as compensation for the former Soviet republic's gas debts. However, Minsk has not yet specified its terms for privatization of the refinery.

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