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The Croatian media is analyzing the situation of the regional oil market after the Serbian NIS put into operation the Deep Processing Plant at the Pancevo Refinery.
Source: Jutarnji.hr
Photo: Printskrin, Instagram / buducnostsrbijeav
The main question is why this will not be good for the Croatian company Ina. The accident may never happen on its own, but from the perspective of Croatian oil company INA, you have to wonder if it should come in such a large company, asks the author of the Jutarnji list text, Marko Biočina.
The company first faced a major cyber attack this year, then the market war between Saudi Arabia and Russia caused the price of oil to collapse, and then the coronavirus pandemic collapsed demand for derivatives.
The result is a business loss of 130 million euros in the first nine months of this year, “but if someone thought that the problems ended there, they were obviously wrong.”
“Well, a few weeks ago, one of INA’s main regional competitors, the Serbian NIS, put into operation a new plant to process heavy waste at its Pancevo refinery,” writes this medium.
This is a similar plant that Ina has been planning to build at its Rijeka refinery for years, and with the help of which the Pancevo refinery will virtually eliminate the production of unprofitable heating oil, a by-product sold to a lower price than crude oil.
“In short, the Serbian company (owned by Russia’s Gazpromneft) will now produce more valuable derivatives than before, at a lower producer price,” explains the author.
Market situation in the region
He believes that the completion of the project in Pancevo, although it passed as relatively unnoticed news for the Croatian public, will significantly affect the regional oil market (still the most important source of energy), but also the business prospects of INA (the largest company Croatian).
“The first effect comes from the basic relationship between supply and demand. Namely, the consumption of petroleum products in the former Yugoslavia has been stagnant or declining for years, and given the environmental agenda of the European Union, it is realistic to expect this trend continue. It is produced and sold from Pancevo, a liter will be produced from one of the existing producers “, the text reads.
As Serbia is also a large importer of derivatives, it is logical to expect that a significant part of Pancevo’s new production will go to the domestic – Serbian market, but we should certainly expect that that part will go to the markets of neighboring countries, especially within a radius of 300 kilometers from the refineries. beyond that if the proper logistical conditions exist.
“As NIS, that is, Gazpromneft has a relatively developed retail network in Bosnia and Herzegovina, where once it took over the chain of service stations from OMV, it can be expected to intensify activities there, but it is not excluded that it will start a stronger commercial step through the wholesale trade in eastern Croatia – both are business challenges for INA, ”notes the Zagreb daily.
Bosnia and Herzegovina is the company’s traditional market and one of the few remaining in the region where Ina has had the opportunity to expand her business as part of MOL.
Photo: Printskrin, Instagram / buducnostsrbijeav
“Traditionally, one market supplied from the Sisak refinery, but after the decision to stop production there and concentrate the refinery’s activity in Rijeka, the most favorable form of supply remained a combination of sea and road transport via from Ploče, where other importers compete “, says the author. .
The company is now facing a serious fight in the market.
“The possibility of the NIS attack on Slavonia, on the other hand, is twofold insofar as the expulsion of exporters from the Serbian market will also affect the market placement of derivatives produced at MOL’s refinery in Sazhalombata,” says Jutarnji .
With less market potential in Serbia, a new market will be sought for those quantities, and eastern Croatia and the northern part of Bosnia and Herzegovina are, they note, extremely favorable because MOL can supply them efficiently through its terminal in Pecs. .
“The market position of INA’s only refinery is deteriorating and there is no quick fix. That is, to become fully competitive, the Rijeka refinery must complete the modernization process and build a plant similar to the one in Pancevo,” Jutanji said.
Distorted competitiveness of the INA
It is a project worth 530 million euros, and the company insists that, despite current losses, it will be completed and go live during 2023.
However, if these announcements come true, the Rijeka refinery will face at least two and a half years of distorted competitiveness, due to oil refining with a significant proportion of heating oil.
“It is logical to hope that the competition will not sleep during that period, but will aggressively use its advantage to obtain the largest possible market share. And then there is the problem of imports from the Mediterranean market, which is increasingly saturated with imports from refineries. from the Middle East and Far East “. Lower labor prices and lower environmental standards also have a significantly lower unit processing price, “the document writes.
The development of the project worth 530 million euros in such market circumstances will not be easy, the commercial results will suffer, says the newspaper, adding that all decisions will be made in a much more stressful environment than ten years ago when formally started the project.
“There is nothing new in the conclusion that time is often the most valuable resource in business. When it is wasted, it often cannot be made up for, and the poor decisions made today often materialize years or even decades. later. But with interest … “, the article concludes.
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