November 30, 2007 / 11:19 AM / 12 years ago

UPDATE 2-Ukraine's disputed refinery to up processing 20 pct

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KIEV, Nov 30 (Reuters) - Ukrtatnafta, the company running Ukraine’s largest refinery, said on Friday the plant would increase processing of crude by 20 percent to 360,000 tonnes a month as of December.

It also said the Kremenchug refinery, short of oil from Russia’s Tatneft TATN3.MM due to a management dispute, is working to restart a second distillation unit that had been closed due to the shortage.

“The conclusion of a contract for delivery of crude allows the company to increase the plan for December, 2007, to process oil and vacuum gas oil by 20 percent to 360,000 tonnes,” the company said in a statement.

Tatneft, a key supplier to Kremenchug, cut deliveries after ex-manager Pavel Ovcharenko forcibly took over the refinery on Oct. 19, saying a court had reinstated him.

Since then, Ovcharenko has managed to buy several deliveries for November and December — 170,000 tonnes for each month at Ukrainian auctions and 165,000 tonnes bought from an undisclosed Russian producer.

Kremenchug normally processes 500,000-600,000 tonnes of crude a month and its oil products usually account for about 40 percent of Ukrainian output.

On Thursday, Interfax cited a Tatneft executive as saying that the refinery is paying far higher prices for its crude, at about $105 per barrel. It provided no conversion in tonnes.

Analysts said also on Thursday that prices for Kremenchug’s refined products had also risen — $1,095 for a tonne of diesel from $1,059, 92 octane petrol rose to $1,139 per tonne from $1,109 and “super” 95 octane rose to $1,168 from $1,129.

Both Ukrainian and Russian governments have called Ovcharenko’s actions illegal — the Russian Tatarstan region is a shareholder in Tatneft, and together they hold about 37 percent of Ukrtatnafta.

But the 2-month stand-off appears to be a long way from being solved. Tatneft told Reuters earlier this month it was willing to go to international courts over the dispute and that it is still awaiting payment for previous deliveries. (Reporting by Pavel Polityuk; writing by Sabina Zawadzki)

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