Session to discuss oil processing development strategy

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It is important that we overcome the recession in oil processing, Belarus President Aleksandr Lukashenko said at the government session to discuss the strategy to develop this industry on 1 June.

“There is no need to stress once again the urgency of the issue. I have once said that that the degree of its importance is comparable with that of the independence of our state. We should do our utmost to ensure the energy independence and security of Belarus,” the head of state emphasized. “We should work out a plan of action to help the oil refiners overcome the difficulties they are facing.”

The President emphasized that oil processing is a strategic industry for Belarus. It accounts for more than 13% of the country’s industrial output and about 17% of Belarus’ export. “Unfortunately, its contribution to the Belarusian economy is falling. The added value of oil processing in the GDP made up only 0.5% in 2016. The contribution of two oil refineries is comparable with that of, for example, Beltelecom,” Aleksandr Lukashenko said.

In his words, the foreign trade in oil and oil products was not good in 2016. Experts predict trade deficit by the end of the year. “This situation raises serious concerns. Once the flagship of the economy, this industry is now turning into a loss-making sector,” the Belarusian leader noted.

He pointed out that huge funds have been invested in the improvement and modernization of the oil refineries. Still there is no proper outcome. They still have not reached the crude oil refining index of over 90%, which they were expected to achieve back in 2015.

The President said that the global situation and the significant decrease in oil prices have had a negative impact. At the same time, certain mistakes were made in determining the oil refining development strategy. Besides, the government does not have a clear-cut plan of action in this field.

“Poor project management, irrational distribution of workforce and funds increased the construction costs and time (up to five years in certain projects). It is doubtful that we will complete the modernization of the oil processing enterprises in 2019,” the head of state said.

According to Aleksandr Lukashenko, it turned out that the Belarusian enterprises were not ready to work effectively in the face of declining oil prices, although they had to be proactive. “Now Naftan hardly makes both ends meet and constantly asks for the state support,” he said.

The President urged the participants of the session to focus on a number of crucial issues such as the situation at the oil refining enterprises and their year-end prospects, the government’s outlook on the long-term and mid-term development strategy in the new market conditions.

The head of state also asked about the amount of money and time that will be required to complete the upgrade of the enterprises and raise the efficiency of the industry, about the planned sources of financing.

“Remember that the economic dimension of oil processing and its efficiency should be in the spotlight,” the Belarusian leader emphasized.

Aleksandr Lukashenko remarked that when approving the appointment of new directors of Naftan Oir Refinery and Mozyr Oil Refinery, he set clear tasks regarding the preparation of feasible action plans. “Enough time has passed for them to get a picture of the state of affairs. I have warned them that he previous practices will not work (as I can see from your proposals today),” the President added.

During the session the head of state also spoke about the tasks assigned to the newly appointed Belarus President’s Aide Alexander Kosinets.

“Many enterprise modernization projects have been failed. I have already instructed the prime minister and the head of the Belarus President Administration to analyze these projects in the near future and report to me. Alexander Kosinets will take on this task. He has been entrusted with these projects, with the recruitment of all kinds of specialists. Natalya Ivanovna (Head of the Belarus President Administration Natalya Kochanova), you should provide him with direct support. All this should be analyzed in an objective manner and reported to me,” the head of state said.

“I will not tolerate such a state of affairs in the upgrade program that was to be completed within a certain timeframe. I will not allow any devaluation, disavowal, or failure to implement the president’s instructions. This is inadmissible. This applies to everything, from Orsha to our today’s conversation. I want an objective analysis and a report,” Aleksandr Lukashenko stressed.

The session also focused on the implementation of investment projects at Naftan Oil Refinery and Mozyr Oil Refinery. Plans have been made to finish the modernization of Belarusian oil refineries in 2019. The resources of the oil refineries will be used in addition to loans. These efforts will allow increasing the crude oil upgrading index to 90%. The Belarusian oil refineries will be able to process oil effectively and at a profit. In turn, their operation will favorably affect the national economy as a whole.

The President was also informed about the implementation of investment projects at Mogilevkhimvolokno, Belshina, and Grodno Azot.