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LatRosTrans will invest 7.4 million lats within four years

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LatRosTrans will invest 7.4 million lats within four years

march 9, 2012 / LatRosTrans

LatRosTrans Ltd (LRT), which is one of subsidiaries of JSC Ventspils nafta (NASDAQ OMX RIGA: VNF1R), is planning to invest 7.4 million lats into its economic activity within the next four years. The company is planning to continue the restructuring and to adapt the oil pipeline Polotsk-Ventspils owned by it for new business needs. It is planned to finish vacating the oil pipeline from oil, cleansing and conserving it in line with the latest technologies so that this pipeline can be used for delivery of gas to Ventspils that has not been gasified up to now. The manager of LRT Igors Stepanovs acknowledges that several industrial clients have already shown their interest in creation of a new gas pipeline.

The manager of LRT Igors Stepanovs is satisfied with the ruling passed on Wednesday, March 7 by the Chamber of Civil Matters of the Supreme Court, cancelling the prohibition for LRT and persons related to it to take actions to pump out and move technological oil from the main pipeline Polotsk-Ventspils in the territory of the Republic of Latvia.

The oil pipeline, which is planned to be adapted for transportation of gas, has not been used for delivery of oil already since late 2002. In turn usage of the petroleum product pipeline Polotsk-Ventspils is very intense, forming a part of the logistics chain between oil processing factories in Russia and petroleum product consumers in western countries. Petroleum products worth 5 billion US dollars are transported annually via the LRT’s petroleum product pipeline. The manager of LRT Igors Stepanovs anticipates that very high volumes of petroleum products will be transported via the petroleum product pipeline in March. “In the last 2 years our transportation volumes have grown slowly but persistently – these were 5.6 million tons in 2010, and 5.8 million tons – in 2011. We anticipate that similar increase rate in petroleum product transport will keep up in 2012 as well,” Stepanovs explains. In the last year – after losses of several years – the company worked with a profit. The unaudited profit of LRT in 2011 was 5.5 million lats, and turnover – 10.2 million lats.

Making use of increase in oil price, LRT succeeded to sell about 40 thousand tons of the oil that was pumped out from the pipeline a year and a half ago. “That enabled us to substantially reduce costs, as we were paying for storage of this oil, yet this oil is not used to ensure operation of our company anymore. Moreover, the sale price now is very good,” explains Igors Stepanovs, manager of LRT, at the same time emphasizing that sale of unusable assets is an important factor in restructuring of the company’s operation. The sale price is 15 million lats, in turn the sale costs that are formed by extraction of oil from the pipeline, cleansing and conservation of the pipeline, oil storage constitute 8 million lats. The money gained from sale of the oil is deposited on LRT’s account in one of Latvia’s banks, but the oil itself is transported to an EU country for processing.