may spend at least CZK 23bn(US$1.2bn) in the next six years upgrading refineries and petrochemical plants to boost efficiency, Chief Executive Officer Francois Vleugels said in an interview. Plan envisages capital expenditure of between CZK 4bn and CZK 4.5bn a year in 2008 and 2009 and investment of between CZK 5bn-6bn in 2010 through 2012. The company's six-year growth plan must be discussed by a meeting of Unipetrol's supervisory board at the beginning of December, Vleugels said. The investments will focus on the upgrade of units at refineries in Kralupy and Litvinov, he said. It will include measures that would boost propylene production at Kralupy and increase production of ethylene and propylene at Litvinov. The plan relies on increasing the company's 51 percent stake in Ceska Rafinerska AS. It also requires the acquisitions of new gasoline stations, Vleugels said.
In our model we calculate with around CZK 21bn investments between 2007-2012 whereas we do not calculate with stake increase in Ceska Rafinerska. Previous transaction between and ConocoPhillips on 16% stake in CRaf implies a value of around US$2bn for 49% stake in the refinery. Thus we believe that announced CAPEX will not be able to cover the cost of further share increase unless it is minor. We need to get more detailed information on the projects after agrees on it. Until that we see the news as neutral.