Ukraine: Lukoil Set to Reopen Odesa Refinery

The Lukoil representative said oil was not getting through to the refinery. Lukoil said last week it would resume delivering oil to the Odesa refinery from November 1. Russian pipeline operator Transneft has found the technical capability to start up oil supplies on the Druzhba pipeline on the Belarusian border-Brody-Odesa route from November 1, 2009, the company said. The Odesa refinery will receive 195,000 tonnes of crude in November, which will allow it to resume oil refining at previous levels.

Lukoil will continue talks with all the concerned parties concerning the possibility of improving the economics of deliveries to the Odesa refinery.  Lukoil's management decided on October 2 to stop production at the Odesa Oil Refinery. "This was a necessary decision owing to the actions of Ukrtransnafta, which stopped pumping oil on the Lysychansk-Kremenchuk-Odesa route on October 1, 2009," the Russian company said. Moreover, Transneft did not have the technical ability to deliver oil to the Odesa refinery on other routes in October.

Alternative oil delivery routes being proposed by Ukrtransnafta would substantially raise the cost of the oil and render the Odesa refinery unprofitable. One proposed route, to ship Russian oil through Belarus to Brody and on to Odesa, would increase transportation costs by $5.7 per tonne.

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