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. Last Updated: 07/27/2016

TNK-BP Backs Up Yushchenko

ReutersViktor Yushchenko
KIEV -- TNK-BP on Friday backed President Viktor Yushchenko's proposal to tackle Ukraine's fuel crisis and outlined plans to modernize a refinery there.

TNK-BP executive vice president Tony Considine said managers emerged pleased from a meeting on Thursday with Yushchenko after he had issued a decree ordering the government to abandon attempts at price setting.

"As a company, we were very supportive of the actions taken by the government summarized in the decree from the president," Considine told a news conference. "We stated clearly that our policies were not collusive in nature. We do not collude with other companies. Our prices for crude oil are set by market mechanisms from Russia.

"We believe Ukraine gains advantage from being close to Russia as a producer of oil."

In his decree, Yushchenko criticized Prime Minister Yulia Tymoshenko's government over the fuel shortages which have gripped the country and demanded prompt action to stabilize the situation and allow the market to function without impediment.

It gave the Economy Ministry a week to rescind decisions setting prices on the oil market. The government was told to produce a solution within a month on creating a comprehensive oil company to explore, produce, refine and sell oil.

Yushchenko later told oil executives that government actions were "a clear example of how not to manage affairs." He pledged to act strictly on market principles.

Tymoshenko had blamed the shortages on a price-setting "plot" by Russian companies, which control four of six Ukrainian refineries and dominate the retail fuel market.

Shortages forced motorists to join long queues at petrol stations, but supplies have resumed in the last two days.

Immediately after Thursday's talks, TNK-BP announced it would speed up maintenance on its Lysychansk refinery to bring it back on stream next week and increase May supplies of crude oil to Ukraine by 70,000 tons to a total of 170,000.

The company announced on Friday it would also bring in 10,000 to 20,000 tons of light oil products.

The president of TNK-Ukraine, Oleskander Horodetsky, said the fuel market was likely to stabilize within 10 days.

"You cannot change things in an instant," he said. "We believe that in seven to 10 days there will be a return to a normal situation."

Considine said TNK-BP had allocated $30 million to upgrade and improve safety and environmental safeguards this year at Lysychansk in eastern Ukraine. Programs for subsequent years were being drafted.

"Our goal is to drive the efficiency of the refinery," he said. "And we believe there are sufficient opportunities to do that without building major new units at this time."

He said TNK-BP had identified market opportunities outside Ukraine, notably a shortfall of diesel and jet fuel in Europe.