By Stephen Bierman
TNK-BP, BP Plcís Russian venture with a group of billionaires, said it may shut the Lisichansk refinery in Ukraine as itís unable to compete with cheaper oil products from neighboring Belarus.
No decision will be made before the results of an anti- dumping investigation to be concluded March 15, Deputy Chief Executive Officer Maxim Barsky said today in Moscow.
Ukraine said last month it may seek to reduce imports of oil products after completing a probe into rising prices. Russia lifted duties on oil exported to Belarus this year under a customs union. The TNK-BP refinery is at a disadvantage because it must pay more for the same Russian crude supplied to refineries in Belarus, according to Barsky.
ďIf there is no decision to increase import duties, we will have to close the plant,Ē Barsky said.
Companies producing oil products in Belarus and Russia can beat those in Ukraine on price because they pay less tax, Artem Konchin, an oil and gas analyst at UniCredit SpA, said today in an e-mail.
Russia increased its export duty to $49.80 a barrel in March following gains in Urals crude prices for northwest Europe, which reached $109.64 a barrel, according to Bloomberg data. Russia taxes products at a discount to crude.
Russia sought to limit the subsidy it provided with the tax exemption to the Belarus domestic market by requiring that duties on oil products exported from Belarus be repaid to Russia.
The Lisichansk refinery posted negative earnings before interest, taxes, depreciation and amortization of $20 million last year, TNK-BP said today in a presentation. The plant has a capacity of about 8 million metric tons a year, Dmitry Zverev, a spokesman for TNK-BP in Ukraine, said today by telephone. Thatís about 160,000 barrels a day.
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