Croatia: INA Oil industry shuts down oil production in Rijeka refinery

Published on 30. May 2014., SEE Energy News

In September Croatia Oil Industry Ina’s management will shut down production in Rijeka Oil Refinery, for an indefinite period, and capacities in Urinj will be used for a storage of imported oil derivates – this is an option which is most seriously thinking about in the administration of the national oil company, confirmed the “Novi list” a source from the top of the Ina.

The information about a possible temporary shutdown of production reached trade unionists and workers in Rijeka Refinery, and among them caused great concern and anger. This has confirmed to the “Novi list” and trustee of the Union EKN in Rijeka, Ivica Perinic, saying that he had an information that the Government intended to stop production due to unprofitability.

“According to the information I have, there is a seriously thinking about stopping the Rijeka refinery on the first day of September this year, but no one knows when it should have been re-started,” says Perinic, who believes that such a management decision, or owners’, Hungary’s MOL and the Croatian Government’s, will be just another in a series by which for years has being systematically neglected refinery’s production in Ina.

“Along with the announced new wave of layoffs 250 workers of Ina, even fifty of them in Rijeka, in the worst way, because of short-term profits, production with a long tradition is being destroyed, instead investing in modernization that now is being late for years, “ Perinic considers.

On the matter of the suspension of production was discussed at the Supervisory Board meeting held on Wednesday, but Ina’s administration didn’t make a final decision, as we learned. However, this option is more than viable, unofficially it is confirmed from the top of the company in order to reduce costs, and losses of refineries that were currently generating. Besides long-term downward trend in sales of oil products, particularly in the domestic market, the biggest problem is lack of modernization of the refinery, and construction of facilities for residue oil, the so-called cocker. By its construction it would be significantly increased efficiency of production, and thus profitability of the refinery, which is only in 2012, according to Ina’s director for Refining and Marketing Arthur Thernesz, generated a loss of as much as 59 million euros. Simply, each ton of processed oil in refinery in Rijeka currently brings to Ina losses.
“Because of that there is the thinking of temporary production suspension, says our source, adding that it does not directly threat the survival of the refinery, whose fate will be disentangled also in September, but deciding whether they will move to the second phase of modernization or not.”
“Processing of heavy residues is a key for a long-term survival of the refinery in the market. The final decision on the investment should be made within four months after making of project base, which is ongoing,” says our source.
If the Ina’s administration decides to start construction of a processing heavy residues of oil, work should begin next year, and construction will last until 2017. Regarding losses of production without processing heavy residues, it is questionable how much the amount of crude oil processed in Rijeka until of cocker’s construction, but it is certain that in this case the production in Urinj be a long-term cost-effective, and therefore unquestionable.
If the Management Board of Ina gives up from the second phase of modernization, the suspension of production in Rijeka refinery could easily become permanent. In this case, the refinery Urinj, due to its strategic position on the coast and proximity to the terminal Janafa, would become just a big warehouse for imported oil products. For the already devastated local economy, particularly at the local level, it would mean the loss of one of rare remaining manufacturing industries, and extinguishing hundreds of jobs, and not of any kind, but highly qualified with knowledge and skills, which bring adequate revenue. In one word, and for Croatia and Rijeka economy it would be – a disaster.