On the eve of a six-week shutdown for major repairs, Mazeikiu Nafta (Mazeikiai Oil), the Lithuanian oil complex majority owned and operated by Russia's second largest oil producer Yukos, reported a dramatic decline in 2002 profits.
The refinery reported a loss of 159.1 million litas (46.1 million euros) for last year, a 41.3 percent decline from 2001, on revenues of 4.6 billion litas, down 12.7 percent.
The loss, based on U.S. GAAP, compares with the company's announcement in January of preliminary losses amounting to 122.7 million litas.
Still, refinery management is putting a positive spin on its books. Paul Nelson English, managing director of Mazeikiu Nafta, said the annual results were better-than-expected thanks to favorable market trends, as well as to a solid performance by the Mazeikiai oil refinery and the Butinge crude export/import terminal.
Mazeikiu Nafta said earlier that it was projecting a loss of around 80 million litas for 2003. However, in view of the successful start to the year - the refinery saw a profit over the first two months - company management intends to revise its estimates for the year.
The refinery, based in northwestern Lithuania, refined 6.6 million tons of crude oil and other raw materials in 2002, down from 6.8 million tons in 2001.
The Butinge terminal handled 6 million tons of crude, up from 5 million tons in 2001.
However, starting March 30 Mazeikiu Nafta will be closed for major repairs. Giedrius Karsokas, head of Mazeikiu Nafta's information bureau, said that the overhaul would last for 43 days, or until May 12. Following the repairs, the oil refinery is expected to run for at least three years without further stops in production.
English said the repairs would make no difference to the oil refinery's customers, as it has sufficient stocks of different oil products to meet their needs. He said it would be a unique operation, as alongside regular maintenance activities modernization works will be carried out.
The $61 million modernization program will enable the refinery to manufacture products that comply with the latest EU requirements, according to English.
A total of $58 million were invested in plant modernization between 1999 and 2002. The last overhaul of Mazeikiu Nafta was carried out in 2000.
Yukos owns 53.7 percent of Mazeikiu, while the second-largest shareholder, the Lithuanian government, holds 40.6 percent.