(45 PLN, 1,55%) estimates that the realization of its PLN 5.6 bln development program will allow it to increase refining margins by 80% to USD 8 per barrel by 2010, when the program is scheduled to end. plans to close the organization of financing the program in December 2007. The company plans for 70% of the investment, nearly PLN 4 bln, to be covered by bank loans. Thus far has spent PLN 800 mln on realizing the program and plans to spend another PLN 500 mln still this year. These investments will be financed from the company's own sources. The company also gave a detailed breakdown of its CAPEX plan. estimates that the largest investments will be made in 2008, when the company plans to earmark PLN 2.1 bln for the program, some 38% of the total amount. In 2009 will spend PLN 1.8 bln, accounting for 32% of the investment and in 2010 investments will amount to PLN 0.4 bln, accounting for 7% of the amount. After completion of the development program, Grupa hopes to be among Europe's top 10 refineries, with the value of the company reaching the level of PLN 10 bln.
Our view: We are less optimistic than , expecting US$ 6/bbl effective refining margin only for 2010. Our conservative stance is due to our belief that refining margin environment will deteriorate in 2010 due to new capacities coming on stream and our view that both Brent-Ural price differential and the pipeline discount is going to decline on the back of lowered Russian oil export to CEE. With its announcement yesterday we think aimed to improve market sentiment on the stock, which is hurt recently due to lowered risk appetite of investors.