OREANDA-NEWS. October 12, 2011. In Brod town (Republika Srpska of BiH) in the presence of the President of Republika Srpska Milorad Dodik, Russian participants of refinery rehabilitation and upgrade project from Zarubezhneft and its partners and multiple guests, a solemn ceremony of starting-up the second phase of Brod Refinery was held.

By launching the second process line the first stage of refinery reconstruction was completed. New process line operation will allow increasing the refining capacity of the facility from 1,2 million tons to 3,0 million tons per year and to produce motor gasoline and liquefied gas with the extremely low sulfur content. Within the closest years (up to 2014) Brod Refinery shall be transferred to production of all kinds of oil-products in accordance with Euro-5 standard.

Prime-Minister Aleksandar Dzobmic; Member of the Presidential Committee of Bosnia and Herzegovina Sulejman Tihic; the heads of the ministries and departments of the Republika Srpska and the Federation of Bosnia and Herzegovina also took part in the solemn ceremony of the new process line launching.

From the Russian part Ambassador Extraordinary and Plenipotentiary of the Russian Federation in Bosnia and Herzegovina Alexander Botsan-Kharchenko; Head of Zarubezhneft Nikolay Brunich; top managers and specialists of the company, Deputy Chairman of Vnesheconombank – major project investor – Anatoly Ballo, heads of the subsidiary structures of Zarubezhneft – NeftegazInKor, Optima Grupa Ltd., engaged in oil supply to the Refinery and products sales in the market, and Zarubezhneftestroymontazh – general contractor for building and assembly jobs, were present.

In his speech General Director of Zarubezhneft, Nikolay Brunich congratulated all the present with this important event and assured that Zarubezhneft and its affiliated structures which carry out works on rehabilitation and upgrading the facilities in the Republika Srpska (BiH) are not going to rest on their laurels. Zarubezhneft together with Vnesheconombank (VEB) shall keep on, according to the plans up to 2015, investing in this project and undertake to fulfill the obligations assumed.

VEB’s Deputy Chairman Anatoly Ballo noted in his speech, that four years ago it was hard to believe that at the location of the deserted facility such a modern refining complex would grow. In particular, he said, that it is a big honor for VEB to participate in this project which is VEB’s first international project. Anatoly Ballo marked a high professionalism and reliability of its partner – Zarubezhneft company.

President of the Republika Srpska (BiH) Milorad Dodik in his speech underscored that today the results were obtained that hardly anybody believed in. It has become possible due to cooperation with reliable Russian partners – Zarubezhneft and Vnesheconombank, which was the major project investor. Summing up the results, Milorad Dodik thanked all the present and expressed his hope for the further efficient cooperation.

After the speeches of the project’s participants and distinguished guests of the ceremony of starting-up were given, the President of Republika Srpska (BiH) M. Dodik, Prime-Minister of Republika Srpska (BiH) A. Dzobmic, a Member of the Presidential Committee of Bosnia and Herzegovina S. Tihic, Ambassador Extraordinary and Plenipotentiary of the Russian Federation in Bosnia and Herzegovina Alexander Botsan-Kharchenko, General Director of Zarubezhneft Nikolay Brunich, Deputy Chairman of VEB A. Ballo, General Director of Brod Refinery S. Kraschuk had pressed a symbolic button of the new process line launch.

Currently this project is producing additional revenues to the budgets of Republika Srpska and Bosnia and Herzegovina in general, and is providing the region’s residents with working places and stable earnings. For the period from 2008 to 2010, as taxes and dues EUR 438 million were transferred to the budget of Bosnia and Herzegovina.

Investments in rehabilitation of the production facilities of the new line – 31 (atmospheric vacuum distillation), 32, 34 and 37 (gas treating and oil-products hydroforming) sections which provide production of gasoline, kerosene and liquefied gas with low sulfur content, amounted to EUR 8 million.

Along with rehabilitation of production capacities a quality update of products production is being conducted. Operation of a new process unit, i.e. Section 04-B “reformate separation Block”, shall allow producing gasoline in accordance with Euro-5 standard. This unit will provide decrease in harmful component content – benzol in gasoline – up to the environmentally acceptable norms.

Thus, in addition to euro-diesel which has long been on sale in Bosnia and Herzegovina, gasoline of Euro-5 standard shall be produced and sold in the market.

New unit’s throughput (300 thousand tons annually) is designed for a perspective considering the second and the third stages of refinery reconstruction. Already in 2012, 290 thousand tons of Euro-5 standard gasoline will be produced. This amount of fuel will be enough to fill up over 7,5 million cars. Investments in new unit construction were over EUR 10 million.

At the second stage of refinery reconstruction in 2012-2014 it is envisaged, in particular, to construct a new isomerization unit enabling the refinery to produce all the gasoline in accordance with requirements of Euro-5 standard; to install the hydro-cracking complex (all diesel fuel shall conform to Euro-5) and sulfur recovery unit (hydrogen sulphide utilization). As a result, by 2015, refining depth shall be increased from the current 73% up to 83%, and the light products output shall reach 68%.

Use of isomerization unit’s product excludes necessity to apply in gasoline environmentally harmful additives.

Since 2008, Zarubezhneft has invested in Brod Refinery’s overhaul and reconstruction approximately EUR 100 million. Within the period from 2011 to 2014 the company is planning to invest in refinery over EUR 500 million.

In addition to Brod Refinery rehabilitation, Zarubezhneft is realizing in Republika Srpska (Bosnia and Herzegovina) the reconstruction and modernization of "Modrica" oil refinery (motor lube plant) and "Petrol" fuel stations network which has also been damaged in the course of hostilities covered the territory of the former Yugoslavia in the 90s of the last century.

From 2008 to the present day, Zarubezhneft has invested in the oil refinery rehabilitation over EUR 5,5 million.

As a result, after 15-year shutdown, in 2009 a process line for hydrocracked base oils production was put into operation. For the first year, 35 thousand tons of base oils have been produced, in 2010 – 55 thousand tons, as of September 22, 2011 – 63 thousand tons. In 2011, it is planned to produce 85 thousand tons, and after the year 2013, the refinery is planning to arrive at the level of 110 thousand tons.

Up to 2015, Zarubezhneft will invest another EUR 10 million in development of this enterprise.

Base oils and paraffin from the refinery are sold in the market of the EU, Asia and South America, part of base oil is used in production of motor and industrial lubricants. The refinery also produces lubricants and functional fluids sold in the markets of the former Yugoslavia and EU countries.

Production line of the oil refinery includes over 250 different products.

At present, at the oil refinery a construction of the automated blending of motor and industrial lubricants with 40 MT capacity is being completed (to be launched in 2012), the facilities for vacuum distillation with 200 MT capacity of hydroisomerizated base oils per year are being designed, the water treatment process is being reconstructed, etc.

Zarubezhneft has modernized and made a rebranding of 56 fuel stations of Petrol network (presently – Nestro Petrol) by investing therein EUR 16 million.

As a result of rebranding and reconstruction, fuel stations have acquired a modern appearance, products and service range has been significantly extended. Retail fuel stations network acquired by the Russian company included 79 fuel stations in the territory of Republika Srpska (BiH) which mainly has been in a poor condition as a result of military operations.

In 2011, retail fuel stations network was extended due to the acquisition of 10 fuel stations in the territory of the Federation of Bosnia and Herzegovina. At present, Nestro Petrol is one of the largest retail networks in the region. The company is intended to continue the work on upgrading the fuel stations, and also to extend the retail fuel stations network in the territory of Bosnia and Herzegovina and the neighboring countries– Serbia and Croatia.