1. The Man Who Has Built The Refinery

The Man Who Has Built The Refinery

26.10.2012

“I AM GOING TO TYUMEN FOR TWO YEARS UNTIL WE COMMISSION ANTIPINSKY OIL REFINERY,” THAT WAS WHAT GENNADY LISOVICHENKO THOUGHT IN 2004 WHEN LEAVING FOR SIBERIA ON HIS BUSINESS TRIP. EIGHT YEARS HAVE PASSED AND HE RECOGNIZES THAT HE HAS STAYED THERE FOR LONG. MAYBE EVEN FOREVER.

THE BEGINNING
Few people know it, but the first idea of building an oil refinery near Tyumen belonged to Transneft company. The top management of that concern decided to build an oil refinery near the capital of the major oil extracting region of the country for producing gasoline. They ordered a small plant in the USA, equipment was delivered to Russia and kept in stock at warehouses, only customs duties were to be paid.

An event occurred. Or was it a fortune? After the next reshuffle of the company’s management the leader of Transneft became Semyon Vainshtok who had received an unequivocal instruction of the president: to focus on the construction of pipelines, primarily, on the most strategically important pipeline, Eastern Siberia – the Pacific Ocean. All other projects, including Antipinsky Oil Refinery, were suspended. No customs duties were received on account, equipment was arrested and put up for auction.

“I learned about it, an idea came to my mind, and I thought that it could constitute the basis for a major project,” Gennady Lisovichenko recollects. At that time he already knew Dmitry Mazurov, current chairman of the refinery’s board of directors and co-owner of New Stream, rather well. In addition to that, they had professional interests in common. Thus, Lisovichenko, now in charge of the day-to-day management and development of the enterprise, the control of the company’s business-plan implementation, has gained much experience in the field of oil refining. And Mazurov with his chemistry background is currently solving the issues of external and internal business policy, investment raising, and determines the strategic priorities of the company.

The history of one of the major investment projects in the Tyumen Region has begun. The story to be continued.

SOBYANIN AT CONSTRUCTION SITE
Quite a few persons opposed the project of Antipinsky Oil Refinery. For a long time the solution of some problems was impeded despite the seemingly obvious perspective and profitability of the new enterprise for the region.

SOBYANIN CONSIDERED ANTIPINSKY OIL REFINERY TO BE A FUNCTIONAL INDUSTRIAL ENTERPRISE CAPABLE OF PROVIDING THE REGION WITH JOBS AND TAXES

They acquired a construction site, repurchased equipment, started the search for investors. It would have cost too much to step back.

Then Sergei Sobyanin interfered. In the autumn of 2005 energetic and reasonably minded governor of the Tyumen Region came to the construction site in order to see everything for himself and find out if the region needed this project. “Everybody told him that a larger enterprise was being built at the neighboring site,” Gennady Lisovichenko notes. “But when he came here he saw the reality as it was. Racks had already been assembled and the plant built at out site, whereas nothing changed at the nearby territory.”

Everything became clear to the professional administrator. Key deputies who accompanied Sobyanin immediately received clear instructions with extremely simple contents: to solve all problems within the shortest time possible.

CONFIDENCE AND PRACTICAL INTEREST
It is clear that even support provided by a high-ranking regional official does not mean that all problems will disappear automatically. However, now Lisovichenko and Mazurov have got a powerful ally and they have expertly made use of this circumstance.

The incident with Transneft which obstinately gave no authorization for connection may serve as an illustrative example. Technical specifications for connection were received only after Sobyanin had interfered

The reasons of such thrilling attitude to the project are evident and Lisovichenko says that he does understand the governor. “He considered Antipinsky Oil Refinery to be a functional industrial enterprise capable of providing the region with jobs and taxes. In fact, we have become one of the major taxpayers of the region even today. And it is, indeed, difficult to imagine what will happen in future.”

Fortunately, the fact that Sergei Sobyanin left for Moscow has not affected relations established with local authorities. Gennady Lisovichenko convinces that incumbent governor Vladimir Yakushev of the Tyumen Region pursues the same policy and always renders all-out support to the key enterprise of the region. Anyway, meetings are convened promptly, and documents aren’t covered with dust on the gubernatorial table. “The governor is a former banker and he understands well what money means,” Lisovichenko states. “That is why he provides support to those enterprises which bring this money.”

HOME, NEW HOME
Having come to the city in October 2004 the former muscovite, Gennady Lisovichenko, at first lived in a hotel. However, Lisovichenko can scarcely be called a muscovite since his career began in these parts of the world, in the Tyumen North.

In “the epoch of Muravlenko” Gennady Lisovichenko made his way from the position of investigator to deputy prosecutor in Nizhnevartovsk. Expanding his labor geography Lisovichenko worked at prosecutor’s offices in Surgut. Then he left for the Khabarovsk Territory and, finally, he came to work in Moscow. Gennady Alekseevich gained invaluable experience in the Russian capital after holding the post of assistant to the General Prosecutor of the Russian Federation. But, at any rate, he knew Siberia first-hand.

First, his plans were simple and clear: to build the refinery, to commission the first phase, to bring up a successor, and peacefully return to Moscow. However, it is not so easy to find a person to whom a project estimated at hundreds of million dollars can be entrusted. Only within the framework of the first tranche USD 80 million were appropriated. And it was he, Lisovichenko, who had to be responsible for the result.

Having understood that his stay as a “guest” continued for too long he moved to a rental flat in the center of the city. But then it was high time to commence the second construction phase. And that was not just “big money,” USD 300 million were at stake. “To whom Dmitry Mazurov could transfer such a project for management? It is possible that no money and no refinery will be left as a result,” Lisovichenko explains.

No other variants remained. Having come back Lisovichenko cancelled his registration in Moscow, settled in Tyumen, acquired a flat and a land plot for construction on the riverbank. Tyumen became his home.

GROWTH POINT
What does the Tyumen Region need an oil refinery for? The question is far from being casual. Tobolsky Petrochemical Complex has always been the leader of local petroleum-chemistry, while oil was traditionally transported for refining to the enterprises of other regions, such as, Ufa, Omsk, and other cities. As consequence, if Russia is often called a supplier of raw materials for the world industry, the role of our region was predetermined to be more modest: to serve as a raw material attachment to a raw material economy. And, by doing so, receive low interest from the cost of the finished product, in this case, gasoline, boiler oil, and diesel fuel.

“We need to develop industry, invest in processing sectors where added value is created,” says Lisovichenko. But he not only says, he does. The commissioning of the first phase of the refinery has made it possible to refine 500 thousand tons of oil products per year. After the second-phase commissioning this indicator has increased by 2.5 million tons. By the end of 2013 six (6) million tons of oil will be delivered to the refinery (only through the pipeline) annually, the relevant agreement has been signed with Sibnefteprovod.

For the first time the Tyumen Region began to provide the world market (two thirds of products are exported) not with crude oil, but with technical gasoline, diesel fuel, boiler oil, including high quality bunker fuel oil for bunkering (fuelling) vessels. Meanwhile local farmers are traditionally granted discounts under agreements made with the regional government.

And this is just the beginning. Now the construction of the 3rd phase the commissioning of which will make it possible to achieve Euro-5 standard is in full swing. As a result thereof the Tyumen Region will transfer to its own gasoline. Croatian well-known company Velesstroy which has completed tens of major construction projects is in charge of construction works. The quality and performance rates are of European level. A state-of-the-art finished product sector has been built on the bank of the Tura River. Pipes have been laid under the ground through which gasoline is being pumped. A railway train consisting of 60 cars is loaded within two-three hours and then departs for the next station which is also owned by the refinery. The train is finally formed there. And this procedure repeats twice a day.

“This sector cost us 1.5 billion rubles,” says Lisovichenko. “Sewage treatment facilities which are being constructed there will cost additionally 1.6 million rubles. It will enable us to completely refuse from discharges in the municipal sewage treatment network. It is a very serious construction activity”.

“TO WHOM DMITRY MAZUROV COULD TRANSFER SUCH A PROJECT FOR MANAGEMENT? IT IS POSSIBLE THAT NO MONEY AND NO REFINERY WILL BE LEFT AS A RESULT.”

But it is only small stuff: the total volume of investments for the 2010-2015 period will exceed USD 2 billion. As of April 2012 USD 700 million have been utilized of which USD 200 million constitute current assets, USD 300 million are the money of shareholders, and USD 200 million are credits. As a result the oil processing depth will grow to 94% and the volumes – to 7.5 million tons per year.

Russian national oil refining industry has never before witnessed the construction of such large-scale facilities as Antipinsky Oil Refinery, especially those which are private property. However, as distinct from many major project of the past years the refinery is being built without raising state investments. Even credits are received only from commercial banks. The first and second phases were built on account of credits provided by Raiffeisenbank. Credits for the third phase are mainly granted by such Russian banks as Gazprombank OJSC and Globexbank CJSC which have signed jointly with Raiffeisen Bank International AG, Raiffeisenbank CJSC, as well as with Glencore International AG, Vitol S.A., and WestLB AG (London), a multicurrency facility agreement for the extension of term and revolving credit lines for an overall amount of USD 750,000,000. New facilities are to be commissioned at the end of 2015.

And this time is unlikely to change – as from 2015 one hundred percent export duty for fuel oil is expected to be introduced, that is why refineries with low processing depth will find themselves on the brink of profitability, maybe even at a loss.

But these are minor details. The refinery is operating, being built, existing. When Gennady Lisovichenko speaks about the refinery one can see that it is something more for him than merely a project consisting of metal and money.

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