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Kazakhoil makes late bid to build station network

After a false start last year, Kazakhoil has unveiled plans to begin building gas stations in Ukraine. The company is playing catch‑up with Russia’s Lukoil and the Tyumen Oil Company (TNK), its two main competitors, who were quicker off the mark on the country’s retail gas sales market.

Kazakhstan’s state oil company, Kazakhoil is also Ukraine’s third‑largest producer of refined petroleum, processing 1.75 million tons of crude oil, or 11.4 percent of the nation’s total, at its Kherson Petroleum Refinery last year. That puts Kazakhoil behind Ukrtatnafta, which supplied Ukraine with 35 percent of its refined oil in 2001, and Tyumen Oil, which refined 29 percent at its Lysychansk‑based Lynos refinery. The Odessa Petroleum Refinery, run by Lukoil, Russia’s largest producer, took fourth place among oil refineries, producing 8 percent of Ukraine’s refined oil.

But now Kazakhoil wants in on the retail gas trade – territory that Lukoil and Tyumen Oil have been steadily conquering over the past year, leaving Kazakhoil searching for good locations for its proposed gas stations.

In 2000, all three oil and gas firms announced plans to expand into Ukraine’s retail gas business after winning majority stakes in the nation’s refineries.

While Lukoil and Tyumen Oil gas stations dot the landscape, Kazakhoil has yet to begin building the stations it originally wanted to start operating by the end of May.

Kazakhoil’s Executive Director Bahidgan Hasanov said the company plans to build 30 gas stations by the end of the year, but he is not optimistic.

“We were unable to start building gas stations during 2001 as we had planned, and we lost a lot of time,” Hasanov said, adding that internal problems at the company caused the delay, but he declined to provide details.

Hasanov said Kazakhoil plans to start building gas stations in cities and along major highways where the company’s competitors haven’t staked a claim. Hasanov said other gas companies have already located in large cities such as Odessa, Zaporizhya, Dnipropetrovsk and the Crimea region.

But Hasanov remains hopeful.

“The number of people driving cars is growing very rapidly in Ukraine and there is still a lot of room for gas stations,” Hasanov said.

Kazakhoil supplies its Kherson refinery with 100,000 tons of crude oil a month for processing. The refinery produces A‑76 and A‑92 gasoline and has recently launched the production of high‑octane A‑95 grade fuel, which it plans to sell at its gas stations through the Nafta Kherson Trading House network of filling stations.

The refinery produces A‑95 gasoline at a catalytic cracking plant, but it had been unable to produce A‑95 gasoline last year because it lacked storage facilities. Now, however, the refinery has installed new tanks capable of holding 5,000 cubic meters of petroleum products, according to a representative of the Kherson refinery. The representative said the refinery plans to produce 25,000 tons of A‑95 gasoline this year.

When building its gas stations, Hasanov said Khazakhoil would focus on offering a wide range of products. He said he believes doing so will increase the popularity of the company’s new stations.

Hasanov said that in addition to the usual services, every station would offer a carwash, repair services and a small cafeteria.

Lukoil Ukraine General Director Mykola Kadenyk said Kazakhoil’s success in the market depends on whether the company can make up for lost time.

But Kazakhoil’s Hasanov said there is room on the Ukrainian market for his company’s stations.

“We have a refinery, and we have products,” Hasanov said. “Now we need a distribution network.”

He said the new chain of 30 stations would allow the Kherson refinery to operate at its full capacity of 7.1 million tons of oil per year.