One of two Croatian refineries will be shut down.
INA’s refinery in Sisak could be transformed into a bio-refinery by 2021. According to the analysis by Deloitte, this is the most cost-effective long-term solution, under the condition that Croatia accepts the so-called RED II regulations. But before that, a transitional solution for the refinery should be found as early as next year. At the beginning of this year, INA asked Deloitte to analyze the best solutions, transitional and long-term, and very soon it will make the final decision for the transitional period for the refinery until 2021, reports Večernji List on September 8, 2017.
There are several possible solutions. There is a possibility that a logistics center in Sisak would be opened which would continue after 2021. Another option is for the refinery to continue with partial production and then transport these products to the refinery in Rijeka until the modernization of the refinery in Rijeka in completed, which should supposedly start early next year and cost three billion kunas.
If the refinery in Sisak were to be immediately transformed into a logistics center, just 106 employees would remain in Sisak, so trade unions are against this option. The other option would keep almost 700 workers, which is only slightly less than the current figure, but that would also mean about 10 million dollars of negative cash flow annually for INA. The logistics center would bring 93 million dollars in the next three years.
“We cannot accept any solution that does not imply the retention of employees and production in both Sisak and Rijeka. As a long-term solution, we accept the transformation into a bio-refinery, because the production from oil is decreasing anyway,” says Jasna Pipunić from the Oil Industry Trade Union.
The cost of building a second-generation bio-ethanol plant would be around 160-220 million dollars, depending on the technology solution. It would employ about 200 people, as well as additional 800 workers in connected businesses – farms that would grow necessary industrial plants for the production of bio-ethanol. Sisak-Moslavina County is ideal for this kind of production. It is not yet known whether INA would undertake the construction itself or with a partner. It is also important to get a confirmation from the government that the RED II regulations would be adopted.
However, that is definitely the only logical long-term solution, given the reports from global markets about the reduction in fuel production. For example, France has reported that by the end of the year it intends to adopt laws on the gradual shut down of all oil exploration and production activities by 2040.
All options were presented on Thursday to trade unions and the workers’ council and previously also to the INA management and supervisory board. As reported by INA, in 2016, the Sisak refinery generated a negative cash flow of 194 million kunas, while the negative financial effect on operating profits amounted to 264 million kunas. The same trend was recorded at the beginning of this year, with 113 million kunas of negative cash flow and 146 million kunas of operating losses. Therefore, a solution will surely have to be adopted very soon.
Translated from Večernji List.
