Page 16 - EurOil Week 43 2021

EurOil NEWS IN BRIEF EurOil

a partner to set up a consortium for the will invest €150mn in Petrohemija’s plant, It said: “The recovery in the European
project. will build a polypropylene production refining market remains vulnerable to
plant with a capacity of at least 140,000 possible pressures from pandemic setbacks,
tonnes per year and will keep the optimal including the spread of more infectious
Serbia starts talks for sale number of workers,” Stevanovic said. variants, the reintroduction of lockdown
measures and a slower-than-expected

of Petrohemija to Russia’s Fitch revises outlook on recovery in international and domestic
travel. Furthermore, a reduction in available
NIS refining capacity during the downturn that
has contributed to the margin rebound could
Deputy Prime Minister and Minister of largest Turkish refiner be reversed in 2022-2023, due to planned
Mining and Energy, Zorana Mihajlovic, Tupras to stable from refinery additions, mainly in Asia and the
talked on October 21 with Kiril Tyurdenev, Middle East. This could squeeze refining
General Director of NIS (Naftna industrija negative margins if an increase in output volumes is
Srbije), owned by Russia’s Gazpromneft, not matched by growing demand.”
about current and promising projects in Fitch Ratings has revised its outlook on largest
the field of energy and the privatisation of Turkish oil refiner Turkiye Petrol Rafinerileri
Petrohemija. (Tupras) to Stable from Negative, while Baltic TSOs launch R&D
“We agreed that NIS is an important affirming the company’s Long-Term Issuer
part of the energy sector and that Default Rating (IDR) at ‘B+’. study for transportation of
cooperation is necessary in order for The revision of the Outlook reflects
projects to be implemented as efficiently improved refining margins amid rising hydrogen in gas grid
as possible, because it is in the interest of demand for oil products after the lifting of
our state and citizens. I am glad that NIS the COVID-19 related mobility restrictions, Gas transmission system operators (TSOs)
has a plan for the next few years and that it Fitch said. However, the refining sector’s of Estonia, Finland, Latvia and Lithuania
is strategically determined and expanding performance remains vulnerable to potential announced on October 20 the completion
regionally,” said Mihajlovic in a statement pandemic setbacks and market imbalances of a joint cross-border public procurement
from the Ministry of Energy and Mining. due to planned additions to refining capacity, procedure for the preparation of a project
When it comes to the project of it added. plan that will provide a basis for them to
construction of TE-TO Pancevo, it The ratings agency also said: “Tupras’s carry out a procurement for a research and
was said that the action plan envisages rating is supported by the company’s development project regarding hydrogen
finalisation by the end of the year, when leadership in the Turkish refined product blending possibilities in their national gas
trial work is expected. market, operation of some of the most transmission systems.
“When it comes to gas supply, we complex set of refineries in EMEA and Besides, the study will assess the size of
are waiting for a new contract between an ability to access and process cheaper, necessary investments for various hydrogen
Srbijagas and Gazprom, negotiations are heavier and sour crudes from a number of blending volumes, Estonian TSO Elering said.
underway and we understand the current suppliers. Tupras ratings are constrained by On October 13, the agreement to prepare a
situation, but there will certainly be no volatile refining margins and the company’s project plan was signed with the procurement
problems with supply,” Tyurdenev said. focus on fuels production with limited winner GRTGaz’s dedicated Research &
The meeting also discussed the business integration. Similar to other Turkish Innovation Centre for Energy (RICE).
development of Petrohemija after its corporates, Tupras is reliant on uninterrupted Considering the EU decarbonisation
privatization, in accordance with new access to local bank funding to support its course and fulfilling the TSOs’ responsibility
technologies, cooperation on new projects liquidity.” towards the market to guarantee the system
and the realisation of existing investment Looking at key rating drivers, Fitch noted integrity and interoperability, the TSOs have
projects in the Pancevo refinery, as well as improved results were expected, saying: jointly decided to carry out a coordinated
the issue of storing mandatory oil reserves. “Temporary closure by Tupras of its key research and development project entitled
Serbia has officially started talks for refining assets in 2020 amid lockdowns and “Evaluation of technical capabilities of
the sale of petrochemicals producer HIP a decrease in fuel demand heavily weighed the natural gas transmission systems of
Petrohemija to oil and gas company NIS. on cash flow generation and drove funds Estonia, Finland, Latvia and Lithuania for
“The government made appropriate from operations (FFO) net leverage higher injection and transportation of hydrogen and
decisions last week, and yesterday we to 14.3x. We expect that the normalisation estimation of required retrofitting measures
officially started negotiations with NIS of refining margins in 2021 will allow Tupras and investments.”
as a potential strategic partner,” Dragan to deleverage swiftly and forecast FFO net RICE will use a scenario approach with
Stevanovic, state secretary at the economy leverage of 2.4x in 2021 and an average of 2.7x various potential hydrogen concentration
ministry, said in a video file posted on the in 2022-2024. levels. The prepared project plan must identify
website of Tanjug news agency. “While forecast levels of net leverage are a methodology for defining retrofitting
NIS placed the sole bid in a tender in line with our positive rating sensitivity, requirements for each scenario and each
for a strategic partner in Petrohemija the dynamics of refining margins remain national system.
earlier this month. The strategic partner uncertain and a longer record of normalised In addition, the project plan must define
intends to inject €150mn in the capital of refining-margin environment would be key principles of estimating required investments
Petrohemija, acquiring a stake of up to to support a sustainable recovery in Tupras’s per system and hydrogen concentration
90% in the company’s capital. “NIS has credit metrics.” scenario.
already accepted the commitments in its Fitch cautioned that the medium-term TSOs are responsible for ensuring safe
offer, which is that in the next six years it market dynamics for refiners were uncertain. and secure operation and maintenance of

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