As of 1 June 2008 the crude and petroleum product transhipment company SIA Ventspils nafta termināls (VNT), which is the subsidiary of the stock company Ventspils nafta will begin the implementation of another modernization stage which foresees the optimization of the operational process and procedures of VNT as well as the increase of labour efficiency and stricter requirements for environmental protection. Modernization of VNT began in the summer 2007 together with the attraction of a new strategic partner - international oil and gas company Vitol. Strategic co-operation between the largest crude and petroleum product transhipment terminal within the Baltic Sea region and the company Vitol which is a powerful global player in oil and gas business has resulted in the formation of a serious regional-scale joint venture. Besides, through the mediation of Vitol the supply of petroleum products has grown significantly and last year - for the first time during the last 5 years - since closing down the crude pipeline in 2003, the volumes of products transhipped by the Terminal have experienced considerable increase. Last year - for the first time during the last 4 years - VNT has again become the heaviest taxpayer in the local budget of Ventspils. “The modernization is aimed at creating the most advanced crude and petroleum product transhipment company within Baltic region which would operate based on the principles similar to those applied in other terminals within Vitol group worldwide, e.g., EuroTank in Rotterdam and Amsterdam. There is an increasing international competition among the crude and petroleum product transhipment terminals, therefore today the modernization and diversification of company's activities is the only way how VNT can adjust itself to the new business situation, maintaining and at the same time strengthening its positions in the global market. The development of VNT will contribute significantly not only to the company; but will also facilitate the improvement of the competitiveness of the whole Ventspils Port,” points out Ronald Okker, VNT Chairman of the Board. VNT Chairman of the Board underlines that if we do not take these decisive steps to ensure company's long-term perspective in due time, that may impose a threat on the successful operation of VNT in the current market situation, especially taking into account the company's structure which took several decades to build. However, initially it was focused on the acceptance of large-size crude cargoes by pipe the operation of which was stopped five years ago. Therefore, within the framework of modernization the company will also broaden and diversify its operations. In addition to the transhipment of crude and petroleum products the company will also engage in their long-term storage and blending services The abovementioned stage of VNT modernization will last until the end of the year 2008 and partly - up to 2009. As a part of the process the company is planning to gradually re-qualify and optimize its workforce which will be done in accordance with all requirements prescribed by the legislation of the Republic of Latvia as well as the HR management standards of the world's best practice and the experience internationally approbated by Vitol. R.Okker: “I would like especially to highlight that in case of termination of employment relationships all the affected employees as minimum will receive compensations as prescribed by the law. We are also actively working on re-qualification of our employees.” Last year the terminal underwent a detailed audit to identify the functions of VNT the further development of which inside the company may reduce its competitiveness, taking into account the necessity for the terminal to deal only with the core functions of its business and to outsource all the other services from specialized companies. “The Change of the company's profile required a review of employees' duties and possibility to combine them in order to optimize personnel expenses and ensure more productive work. In addition the positions requiring requalification of personnel or attraction of new professionals who would work on an international level were identified. At the moment the new operational model is being worked out which will accurately incorporate all the necessary changes in personnel,” explains VNT Chairman of the Board. Within the first stage of VNT modernization several significant improvements have already been reached: • A list of measures have been taken to improve the safety of crude and petroleum product transhipment; • Company's internal audit has been conducted; • Partial reconstruction has been done in VNT tank farm; • Continuous informative system has been put in place to inform VNT personnel about the changes in the company. “Although we are aware of the fact that in the modernization process changes which at the first glance may seem uncomfortable for many people are introduced, all the decisions are taken based on a careful analysis of the company's operation and market developments. Competitive companies must be able to adjust themselves to various business conditions and challenges. That is exactly what we are trying to do in order to ensure a long-term growth for the company and our employees. If there are any changes in market situation we reserve a possibility based on mutual interests to restore the co-operation with our former colleagues” emphasizes R.Okker. JSC Ventspils nafta For further information, please contact Gundega Vārpa (PR and Advertising Manager), tel. 7229793; e-mail: gundega.varpa@vnafta.lv