According to the audited consolidated report of JSC Ventspils nafta for 2006,
consolidated net turnover of JSC Ventspils nafta Group reached LVL 69.3 million
in 2006 while net profit amounted to LVL 6.85 million which is by LVL 1.15
million, or 20.2%, more than planned.
Turnover level of JSC Ventspils nafta in 2006, which is lower than planned, was
influenced by the unstable and practically unpredictable situation which in
relation to Ventspils nafta termināls Ltd, the subsidiary of JSC Ventspils
nafta and crude oil and petroleum product transshipment company, not only
depends on high railway tariffs politically defined by the Russian Federation
outside the ports of Russia, but also on the high oil product import duty and
situation in the market in general. Although not taking into consideration
negative externals Ventspils nafta termināls Ltd operated well during the
reporting period making a profit of more than LVL 0.6 million, we can expect
that also in 2007 company's results will depend on the difficult situation in
the sector of petroleum product railway transport.
At the same time we should stress that the administrative bodies of Ventspils
nafta termināls Ltd actively participating in introduction of new kinds of
services in 2006 significantly fostered receiving of crude oil and petroleum
products from sea. In 2006, Ventspils nafta termināls Ltd transshipped 5.7
million tons of crude oil and petroleum products in total. Crude oil and
petroleum products delivered to the terminal by sea reached 1.24 million tons
of the total transshipment amounts, which is by almost one million tons more
than in 2005. The international consortium Vitol, which is the new shareholder
of JSC Ventspils nafta, has also appreciated the opportunity to deliver crude
oil and petroleum products by sea by tankers. By the agency of Vitol, the
terminal received a substantial amount of petroleum product cargos from sea
already in the autumn of 2006. This cooperation continues also in 2007.
Already at the beginning of this year, Ventspils nafta termināls Ltd
successfully started receiving and transshipment of gas oil transported by
petroleum product pipelines. It is planned that this kind of service will play
an important role in terminal's activities also in the future. Full
participation of the new strategic partner, the company Euromin Holdings
(Cyprus) Limited of the international consortium Vitol Group, in the terminal's
share capital, administrative bodies and business development will also
positively influence the operation of Ventspils nafta termināls Ltd in 2007 and
further. As we already emphasized before, the year 2006 for the public JSC
Ventspils nafta Group was a year of specific changes directed towards the
future because the portfolio (38.6%) of JSC Ventspils nafta shares previously
owned by the state was sold by the agency of the Riga Stock Exchange during a
public auction organized by the Latvian state. In the result of this auction,
Euromin Holdings became the owner of 34.75% of shares of JSC Ventspils nafta
soon after the auction publicly announcing about the willingness to develop the
transit industry of JSC Ventspils nafta Group.
“From the viewpoint of long-term prospects of JSC Ventspils nafta and
efficient management of the company, this was certainly the main event in the
concern's history of last ten years ensuring participation of international
high-level professionals in administrative bodies of JSC Ventspils nafta and
creating new and unique opportunities in the development of JSC Ventspils nafta
transit companies,” says Olga Pētersone, the chairperson of the Management
Board for JSC Ventspils nafta.
LatRosTrans Ltd, another transit company of JSC Ventspils nafta Group and owner
and operator of crude oil and petroleum products in the territory of Latvia,
operated successfully in 2006 piping more than 14.5 million tons of crude oil
and petroleum products and by 6.3% improving results of 2005. At the same time,
the reporting period for LatRosTrans Ltd became notable due to alarming events
outside the borders of region respectively influencing the results of JSC
Ventspils nafta Group, too. Selling of shares of the Lithuanian company
Mazeikiai Oil to the Polish oil company Orlen clearly marked the geopolitical
aspects of this sector and continues to influence political and economic
decision-making in this area because oil pipage from Russia to the Mazeikiai
Oil refinery in Lithuania has been stopped since July of 2006.
According to explanations provided by Russian institutions, such a situation as
if developed because of damage of the oil pipeline Druzhba located in its
territory. The managers of the Russian oil pipeline monopoly Transneftj
already announced that oil supply to Lithuania might not be resumed in case of
too big repair costs. As oil transport to Lithuania is partly ensured through
the pipeline owned by LatRosTrans Ltd, the company in the reporting period
reflected single expenditure of LVL 3.6 million related to partial decrease in
value of technological assets because of stopping oil pipage to Mazeikiai. This
expenditure will not influence results of economic activities of LatRosTrans
Ltd and JSC Ventspils nafta in the next years.
JSC Preses nams, the largest printing concern of the Baltic States and
subsidiary of JSC Ventspils nafta, during the reporting period continued
introduction of considerable organizational and functional changes started in
2005 in order to reach company's business goals and ensure maximum operational
effectiveness. Total production restructuring moving production units from
Riga, the capital city of Latvia, to the suburbs unfortunately was impossible
in the reporting period for the company had to introduce changes in the
technical project of the production unit not only caused by reasonable increase
of costs in building industry because of general inflation and the one in
particular field, but also by additional requirements in the aforementioned
industry, which not always were motivated.
During the reporting period, services of JSC Preses nams to Latvian customers
accounted for 73% of the total amount of services rendered by the company while
export and supply within the European Union reached 27%. Net turnover of JSC
Preses nams during the reporting period was negatively influenced by the
increasing competition in global printing market - mostly in the segment of
book, brochure and image production. However there was a growth in the
magazine production segment - amounting to 3% for stapled editions and 8% for
magazines with soft cover.
Anticipating further development of the company, a strategic development
programme of JSC Preses nams until 2011 was worked out in the reporting period
and after that planning to double company's operating results in this
particular period. In the next five years, JSC Preses nams is planning to
invest several tens of millions of lats in creation of new production units,
restoration of the existing and purchase of new technogical production
equipment.
In 2006, the Management Board for JSC Ventspils nafta devoted special attention
to issues related to the development of concern's real estate business sphere
becoming familiar with opinions of professionals about potential development
prospects of real estate owned by the concern at 3, Balasta Dambis in Riga. The
aforementioned piece of land is situated in the city centre at a strategically
important place in Ķīpsala where administrative and production premises of a
printing concern JSC Preses nams, a subsidiary of JSC Ventspils nafta, are
located at the moment. These opinions will form a basis, which is planned to be
improved in the context of due diligence of the territory for city planning,
making already concrete decisions about further prospects of this property and
starting all the necessary harmonization works for their implementation in the
corresponding institutions in Riga.
JSC Ventspils Nafta
For further information,
please call Gundega Vārpa
(phone number - 7229793)
or e-mail to gundega.varpa@vnafta.lv
