Mazeikiu Nafta published the preliminary assessment of the damages caused by fire and its action plan for emergency response. Based on the preliminary assessment, incident associated damages are estimated to be between 62 million and 131 million Litas (between US$ 22.5 and 47.5m). 2006 net profit of the Company is forecasted to be reduced due to the incident by 105 million Litas (US$ 38m).
The past incident capacity of Mazeikiu nafta refinery is 15,000 tons per day excluding the Vacuum unit which is around 55% of to pre-fire daily throughput of 27,400 tons a day. The company estimates that it will take from 6 to 9 months until refinery can return to its pre-fire opeartional capasities.
Our view: We have assessed the damages to few tens of million of dollars last week, which is in line with the recently published estimate of Mazeikiu Nafta. US$ 38m losses in 2006 should be followed by further losses in 2007, depending on the length of repair process. If reconstruction takes for 9 months and PKN starts consolidating Mazeikiu by the end of the quarter, the Polish company’s P&L would also be affected.