Alliance Oil Company today provides an update on downstream operations and capital projects against the background of the unprecedented water flooding in the Russian Far East. Oil product demand in the region has remained firm, however sales volumes and margins in certain areas were affected by distribution limitations. Overall downstream sales and processing volumes remained at historically high levels. The schedule for connecting the Khabarovsk refinery to the East Siberian Pacific Ocean (ESPO) system has been adjusted with first crude deliveries now planned for the second half of 2014. The plan for mechanical completion and initial testing operations of the new hydroprocessing complex at the Khabarovsk refinery has been reviewed to reflect the current progress.
Since the end of August 2013, the water flooding has presented significant challenges to Russia’s Far East regions. Water in the Amur and Zeya rivers peaked at almost 10 meters above normal levels. Alliance Oil’s downstream operations in the Amur and Khabarovsk regions and, to a lesser extent, in the Primor region remain affected.
Despite the challenges, the professional planning and coordination between the Company's qualified personnel and specialized official services have limited the potential damages of the flooding. The exposure to the main assets, including the Khabarovsk refinery, was significantly reduced. There were no reports of accidents related to pollution or oil spillage.
In the Khabarovsk and Komsomolsk areas, shipping delays resulted in lower oil product sales while overall volumes remained at historically high levels. Alliance Oil continues to support the recovery of the affected regions by joint charity actions with local authorities and by supplying oil products at discounted prices. Thus, the Company’s current pricing policy does not reflect the recent increase in domestic crude prices, which has affected the Company’s performance in the current quarter as previously indicated.
The schedule for connecting the Khabarovsk refinery to the ESPO system has been adjusted, and the first crude delivery to the refinery via pipeline is now scheduled for the second half of 2014. The connecting pipeline is being constructed mainly in tunnels through the Khabarovsk city infrastructure, and the project is expected to remain exposed to flooding consequences.
The modernization plan of the Khabarovsk refinery and the launch of the new hydroprocessing complex have been reviewed. The mechanical completion and testing of the Hydrotreater and Sulfur production units are expected in the end of 2013. The testing and commissioning of the Hydrocracker and Hydrogen production units are planned for the first half of 2014. The final testing schedule will depend on actual winter conditions.
The hydroprocessing complex is expected to be launched upon successful completion of testing operations and receiving all necessary permissions from the regulatory authorities.
An operational update for September and the third quarter 2013 will be disclosed on October 10, 2013. Third quarter 2013 financial results will be disclosed on November 21, 2013.
For further information please contact:
Arsen Idrisov, Managing Director, Alliance Oil Company, Tel.: +7 495 777 18 08
Eric Forss, Chairman, Alliance Oil Company, Tel.: +46 8 611 49 90
Also visit www.allianceoilco.com
Alliance Oil Company Ltd is a leading independent oil and gas company with vertically integrated operations in Russia and Kazakhstan. Alliance Oil has substantial oil and gas reserves and downstream operations that include the Khabarovsk refinery and the leading network of gas stations and wholesale oil products terminals in the Russian Far East. Alliance Oil's depository receipts are traded on the NASDAQ OMX Nordic under the symbol AOIL.