Media outlook in July 2005

"LUKOIL" has shutdown the Odessa Oil Refinery and plans to modernize it to the European level. The construction works will last for three years, but the oil companies are sure, that this will not reflect on the fuel market, and Ukraine is not threatened with another gasoline shortage. However, the observers do not rule out, that for three years the picture in the oil industry could be profoundly changed.

Quality of gasoline, which is manufactured by the Lisichansk Oil Refinery, will now comply with the highest European standards. This will be further promoted by the recent launch of a new gasoline isomerization unit at LINOS.

Almost all fuel stations sell the A-95 gasoline at UAH 3,50. Such price was predicted by the experts still two months ago. Such scenario was depicted by the Minister of Economy Sergey Terekhin when he was speaking about consequences of removal the manual management of the oil products market. The first objective reason is the oil price increase at the world markets. 10% growth of prices for crude oil in one month will for surely reflect on the ready made products.

The Governor of the Lugansk Region Aleksey Danilov believes that the absence of any accidents at LINOS for the last 20 months is an achievement. This information was revealed by the Press Department of the State Administration Office. He as well noted that LINOS comprises three parts which constitute the business policy - publicity, openness and legality. "Besides, the business ethics and culture of mutual relations between the partners are very vital", - underlined Aleksey Danilov. The Head of the State Administration Office noted that the start-up of the new isomerization unit for gasoline was an evidence of revival of LINOS.

The Antimonopoly Committee of Ukraine imposed a fine upon LLC “ТNК-ВР Ukraine” (Kiev) in amount of UAH 50 000 for provision of inadequate information about business trips of the company’s employees.

The Committee informs that the investigation does not give any grounds to accuse the oil companies of deliberate increase of the prices for the fuel. But nevertheless the Antimonopoly Committee of Ukraine imposed a fine in amount of UAH 300 000 upon TNK for other minor violations. The experts call this as an original justification of Kostusev before the Cabinet.

The Antimonopoly Committee of Ukraine did not reveal any concerted anticompetition actions at the oil products market of Ukraine, informed the Head of the Antimonopoly Committee of Ukraine Aleksey Kostusev at an open meeting of the Committee on July 19. He noted that the Committee closed the case on suspicion of the anticompetition conspiracy against “ТNК-ВР Ukraine”, “LITASKO-Ukraine”, “LUKOIL-Ukraine”, LINOS (the Lisichansk Oil Refinery), “LUKOIL” (the Odessa Oil Refinery).

The price of the Ukrainian oil reached the record level for the last five years – on Friday the price has grown by 10% at the auction of the Ukrainian Stock Exchange (up to UAH 2 283,71 per ton). The oil companies believe that the record growth of the prices for the Ukrainian oil can serve as the base for the future price growth for the oil and the oil products in the country.

On July 19 the Antimonopoly Committee of Ukraine intends to hold an open meeting, where it plans to reach a verdict on three cases at the oil products market.

On July 14 the Ukrainian Government and Open Joint Stock Company “Lisichansknefteorgsintez” (“LINOS”, the Lugansk Region) signed an agreement on paying off the debt in amount of EUR 52,3 mln to the State Budget arising from fulfillment by the State of the obligations under the state-guaranteed credit from the German Westdeutsche Landesbank (West LB) to "LINOS".  "In fact, it is for the first time that such a huge indebtedness is repaid to the State. Earlier such credits were not returned and had to be repaid at the expense of the State Budget", - stated the Press Department of the Ministry of Finance.

Interview with the Head of the Antimonopoly Committee of Ukraine. Replying to the question how the case on anticompetition conspiracy of the gasoline traders ended, Aleksey Kostusev underlined: "At present the Committee investigates two cases against the oil companies. The first case is on suspicion in anticompetition conspiracy of TNK-BP Ukraine, "LITASKO-Ukraine", "LUKOIL-Ukraine", LINOS (the Lisichansk Oil Refinery), "LUKOIL" (the Odessa Oil Refinery)...

Last year the road construction companies have used about 700 000 tons of bitumen for renovation and construction of Ukrainian motor-ways, - half of this amount was imported. According to the experts, the quality of the Ukrainian product, for example of Lisichansk production is higher than that of the imported products.

A number of leading operators of the retail market have raised the price for the A-95 by UAH 0.05-0.06. According to UPECO, the price for the A-95 in the fuel stations network of “LUKOIL” has grown from UAH 3,25 per liter to UAH 3,3 per liter over the weekend. The price for this grade of fuel has as well been increased to the same level in the fuel stations networks of “Neftegaz-Ecoil”, oil company “Alliance-Ukraine”, “Ukrtatnafta” andТNК. At the same time in the fuel stations network “Klo”, which sells the oil products from ТNК, the A-95 produced in Ukraine costs already UAH 3,32 per liter.

Last two-three years the notion “videoconferences” became feasible. However, at present only big companies, bank institutions and foreign branch offices can allow themselves such an expensive pleasure. However, some companies hold conferences using solely video technologies. For example, LLC ТNК-ВР Ukraine holds videoconferences practically every day, and sometimes even up to five times a day.

The Antimonopoly Committee of Ukraine made a statement, that the Russian enterprises ТNК, LUKOIL” and “Alliance” jointly control the bigger part of the Ukrainian market of oil products. In the meantime the Ukrainian legislation says that only that company could be regarded as monopolistic which controls at least 35% of the market. At the same time the indexes of the Russian oil companies do not even reach that level. So, today “ТNК” holds about 30% of the segment, the share of the Oil Company “Alliance-Ukraine” makes approximately 14-15%, while “Lukoil” controls only 10% of the market.

The other day the Head of the Antimonopoly Committee of Ukraine Aleksey Kostusev got suspicious of the Russian oil companies “TNK”, “Lukoil” and “Alliance” trying to create monopoly at the fuel market. However, according to the observers the real situation in the industry supports the contrary. The first denial of the words of the Head of the Antimonopoly Committee of Ukraine is the Ukrainian legislation, which says that only that company could be regarded as monopolistic which controls at least 35% of the market. At the same time the indexes of the Russian oil companies do not even reach that level. So, today “ТNК” holds about 30% of the segment, the share of the Oil Company “Alliance-Ukraine” makes approximately 14-15%, while “Lukoil” controls only 10% of the market.

Standards of highway construction nowadays require new technologies, modern equipment and high-quality construction materials. The latter are very often imported from other countries. However, the Ukrainian manufacturers of the bitumen insist – the domestic product is capable to satisfy all requirements of the highway construction companies. After a new bitumen unit was commissioned at the Lisichansk Oil Refinery they started to manufacture products which are not inferior to the foreign bitumen.

As opposed to July the results of the branch in June have formed already. Instead of 1.8 mln tons of oil of the overall amount of processing which were announced by the oil refineries earlier this month the plants have processed only 1.5 mln tons. The overall results were influenced in the first line by the shutdown of Drohobych Oil Refinery for repair works. Besides, the oil processing at the Odessa Oil Refinery and “Neftekhimik Prikarpatya” dropped down. The only enterprises which sustained the production in June at more or less stable level were “Ukrtatnafta” and LINOS.