Czech Company MND Suspended Financing of Plant Construction in Sverdlovsk Oblast

01.04.2009 — News

THE SVERDLOVSK OBLAST.

The slump in world oil prices has virtually frozen one of the uncompleted construction projects in the Mid Urals. At present the investment into the Verkhoturye Refinery project in the north of the region ceased almost entirely.

According to the information received from a source in the Sverdlovsk Oblast Government, the financing provided by a Czech company Moravske Naftove Doly (MND) that sponsored the project, ceased as soon as the world market prices of petroleum products have slumped. When the financial standing was stable the investors intended to finish the construction by 2011 and the estimated total project cost was $2.4 billion. A half of the sum was going to be provided by MND and the other half was going to be loaned by the Czech Export Bank. The fact that the project has been brought to a standstill raised serious concern in the Mid Urals Government, which signed a memorandum on the construction in Verkhoturye with the Czechs back in February 2008. A delegation from the Czech Republic will visit the Sverdlovsk Oblast on 7-8 April. Russians suggested that the MND representatives should be among the members of the delegation; however, the investors turned down the proposal to come to the Urals for reasons unknown.

Anatoly Moiseyev, the Director of OOO Verkhoturye Refinery remains optimistic. He said to RusBusinessNews that the Czech party is still interested in the project; moreover, the Russian contractors are also willing to engage in the construction of the refinery. According to Mr. Moiseyev, about $500 thousand have been spent on the design work to date. "The Czech side has helped us with the project assessment and the calculation of options for the production process optimization. Now we are developing the raw materials supply schemes for the plant. By 2011 the refinery will not be completed, of course, but 2012 is quite feasible, however," he pointed out.