Rosneft faces $100-MM bill to boost safety at Bashneft refineries

MOSCOW (Reuters) -- Russia's top oil producer Rosneft will have to spend up to $100 million to improve standards at ageing refineries it bought last year, industry sources have told Reuters.

Photo Courtesy of Reuters.
Photo Courtesy of Reuters.

Rosneft took control of the sites in October when it bought a 50 percent stake in Bashneft for $5.7 billion as part of Russian privatization efforts.

Now it must address safety concerns after a string of incidents over the last year, including a fire last week, and investigations by Russian industrial safety watchdog Rostekhnadzor.

At least six people died in a fire at a Bashneft plant last July. The company said no one was hurt after a fire at its Ufa refinery last Thursday.

"According to preliminary information, the reasons behind persistent accidents have been breaches in industry safety standards related to organization and carrying out maintenance, servicing, technical diagnosis and checks," Rostekhnadzor said in a statement.

A source at the company said it would need $100 million to upgrade the plants. Another source, familiar with Bashneft's plans, confirmed the scale of possible financing.

Rosneft said it had prepared a program "to eliminate the irregularities which have been found. To eliminate some irregularities, reconstruction and technical re-equipment of the industrial units is needed."

"A significant number of the facilities have been in an unsatisfactory condition," it said.

Bashneft's former management declined to comment.

Bashneft's plants were built mostly in the 1930s and 1940s under former Soviet dictator Josef Stalin. They form one of Russia's largest refining hubs with an annual capacity of around 420,000 bpd.

Reporting by Olesya Astakhova and Vladimir Soldatkin; Writing by Vladimir Soldatkin; editing by Jason Neely

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