Bloomberg News

Gazprom Neft to Increase Refining, Expand Retail Operations

February 13, 2009

OAO Gazprom Neft plans to expand its refining capacity and spend as much as $70 million on building filling stations as the Russian government encourages oil companies to develop crude processing.

The oil arm of OAO Gazprom, the state’s natural-gas exporter, will “in the next few years” expand its annual output of refined oil products by as much as 5 million metric tons at its Moscow and Yaroslavl refineries, Chief Executive Officer Alexander Dyukov told reporters in St. Petersburg today.

The company’s annual refining capacity rose more than 16 percent in the past two years to 28.5 million tons, Dyukov said. The company will also add a network of 20 stations in the Leningrad region, which surrounds St. Petersburg, Russia’s second-biggest city.

Prime Minister Vladimir Putin yesterday met with executives from the industry to discuss tax breaks and aid as the government seeks to improve refining and spur new exploration. Gazprom Neft may expand its spending program as a result of the state support, Dyukov said.

“Our investment potential will increase if the government extends its support to Gazprom Neft and the industry as a whole,” Dyukov said.

Tax relief may create a new “foundation” for Russia’s oil industry, easing the tax burden in those regions with less developed oil fields that lack sufficient infrastructure, Dyukov said.

To contact the reporter on this story: Paul Abelsky in St. Petersburg at pabelsky@bloomberg.net.

To contact the editor responsible for this story: Chris Kirkham at ckirkham@bloomberg.net


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