Tenge Devaluation to promote oil-refinery production

ATYRAU. February 10. KAZINFORM /Andrey Sokolov/ Devaluation of the tenge will alow the Atyrau Oil-Refining Plant to not only maintain its export potential but also to expand its production, thereby increasing its labour force. All the obligations regarding social programs will also be fulfilled. This was stated by the deputy finance director, Vera Dumler in an interview with our correspondent.

What was the reaction at the Plant to the news of the currency devaluation? The reaction was actually positive. I could even say that this was expected by us for quite some time already. We have been hitting hard times at the plant already since last December. Our troubles were not due to the lack of demand on the international markets, but mainly due to the exchange rate that was a bit too strong. Of course devaluation measures implemented by other countries also aggravated the situation. As a result our products lost their competitive strength. As far as I know, there were even talks of stopping all operations. I don't think that complete stoppage of operations would have taken place. We did decrease our production to the lowest level possible, however, there was still demand for gas on the domestic market. Unfortunately our technologies do not allow us to only produce light oil products. We also produce furnace oil, vacuum gas oil, coke and fuel oil, 70-80% of which is usually destined for export. This is where the exchange rate affected our competitiveness and the result was "inventory pile up". We suffered substantial losses but now are preparing to restart the shipment of our products. Therefore the effect of the devaluation is quite positive for our enterprise and we expect that the prices of our goods will decline by about 20-25%. This is sufficient enough for us to regain our competitiveness with respect to the foreign producers. How long do you think will the recovery process take place before your plant can return to the maximum level of production? According to our assessments we will be able to realize a large share of our "inventory pile up" and get back to our full capacity oil-refining operations very soon. Our average costs will decline immediately which will allow us to expand our operations, maintain and perhaps even increase our workforce. Imports also play an import part in your production process. Therefore the relatively more expensive Euros and dollars will have a negative effect on your revenue. Well most of our imports come from Russia which also devalued its currency, therefore the impact is negligible. The share of products that we do purchase using euros and dollars is quite small and the rise in profits from the devaluation of the tenge will allow us to fully cover the exchanger rate differential. Thank you for the interview.