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What Is Happening With Belarusian Oils Refining Industry?

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What Is Happening With Belarusian Oils Refining Industry?
PHOTO: MAZYR.BY

Some interesting data surfaced regarding the financial condition of the industry.

The last year was marked for refineries by sharp jumps in raw material prices, as well as a shortage of supplies from the Russian market. Let's see how this affected the industry's finances, banki24.by reports.

There are two largest oil refineries in Belarus - Mazyr Oil Refinery and Naftan. The first has a share of Russian shareholders.

The corporate report of Rosneft for 2020 says that this company indirectly owns 21% of the shares of the Mazyr plant - through PJSC NGK Slavneft.

Naftan, on the other hand, is fully controlled by the Belarusian state. In the first quarter of 2020, due to the oil contradictions between Belarus and Russia, the volumes of Russian oil supplied to both refineries were significantly reduced.

In January-March, the output then fell by 42%. By the way, because of this, there is a frantic growth in production in 2021 - after all, it is very easy to grow to an abnormally low base.

For 3 months, production increased by 47.1% by 2020. In the second quarter of 2021, this effect will significantly weaken. Last year, the peak of profitability in the industry was observed from March to May.

It was at that time that record low oil prices were kept, which allowed refineries to take cheap raw materials for processing. Since the summer, as oil prices recovered, the industry's profitability began to decline rapidly. In December, refiners closed at about 5%. In 2021, the decline in profitability continued.

In Q1, it fell closer to 3%. It is interesting that such a landmark was chosen by the Belneftekhim concern. In April, representatives of this department said that the target profitability parameter for Belarusian refineries was set at a sales profitability level of about 3%.

According to the report for 2020, Naftan's revenue decreased from 7.712 to 6.520 billion BYN. At the same time, due to successful months, the enterprise was able to increase its profit from sales - from 259.9 to 763.3 million BYN. As a result, the plant's 2020 profitability reached double digits.

Naftan's net profit remained low for such a huge enterprise - only 4.5 million BYN in 2020. The plant's short-term assets as of January 1, 2021 were BYN 1.103 billion lower than short-term liabilities, which indirectly indicates a deficit in its own turnover.

Revenue at the Mazyr Oil Refinery also decreased - from 8.410 to 6.659 billion BYN. But profit from sales increased from 470.7 to 729.6 million BYN. As a result, the plant's sales profitability also exceeded the 10% mark. The net profit of the Mazyr Oil Refinery turned out to be an order of magnitude higher than that of Naftan - 327.4 million BYN.

The plant's short-term assets were 251.3 million BYN lower than short-term liabilities. Since the Mazyr Oil Refinery is the issuer of bonds, the plant also published interim reports for the 1st quarter of 2021. The plant's revenue, as expected, increased from 1.125 to 2.408 billion BYN, but the profit from sales fell from 105 to 34.8 million BYN.

In other words, the return on sales fell below 2%. Net profit for 3 months amounted to BYN 21.4 million.

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