Russia's Surgut ups refinery upgrade cost to $2 bln

ST PETERSBURG, Russia, April 8 (Reuters) - Surgut SNGS.MM, Russia's fourth-largest oil producer, said on Tuesday it will invest at least $2 billion in its long-delayed Kirishi refinery upgrade, more than doubling the project's initial cost.

Surgut had previously estimated the cost of the reconstruction, which includes building hydrocracking and catalytic cracking units to raise output of light oil products such as gasoline and gas oil, at $800 million.

Last April, a Surgut source told Reuters that the company was going to sign a contract worth more than $1 billion with a general contractor.

Vadim Somov, general director of the 400,000 barrel-per-day refinery, told reporters on Tuesday that building the hydrocracking unit alone would cost the company $2 billion.

Work is 30 percent complete with the aim of launching the unit at the end of 2009, he said.

The hydrocracking unit is expected to increase the plant’s refining depth to 75 percent from the current 54 percent.

In 2011, the refinery plans to start building a catalytic cracking unit to be completed by 2015. Refining depth is expected to reach 90-92 percent by that time, Somov said.

Surgut, which produced 1.3 million barrels per day last year, is one of Russia’s most secretive companies. It does not publish results under international accounting standards and since 2003 it has declined to disclose its ownership structure.

Kirishi, Surgut’s only refinery and Russia’s biggest oil processing plant, has been postponing the major reconstruction work since the mid-1990s.

Somov reiterated Surgut’s plans to build a second refinery with capacity of 240,000 bpd in Kirishi, near St Petersburg. (Reporting by Denis Pinchuk, writing by Tanya Mosolova)