Power consumption will be cut for oil and fat producers

Oil and fat companies might miss the season

Photo: Konstantin Melnitsky

The Ukroliyaprom Association asks the government to lift restrictions on consumption of electricity at oil extraction plants, according to its CEO Stepan Kapshuk. He said last week the oblenergos (regional power distribution companies) sent letters to companies processing sunflower demanding to limit power consumption by 10 — 30% over the period of August 11 — 31 with a loss of capacity in the power network. Capital has the corresponding documents at its disposal. The press service of Odesaoblenergo explained that such energy saving was initiated by the Ministry of Energy and Coal Industry and Ukrenergo. These requirements will apply not only to oil processing companies but also to all major consumers of electricity. The reason for the saving mode is the lack of coal for production of thermal energy. According to the Ministry of Energy, last month the amount of extracted coal dropped by 21.6% — to 5.58 mn t due to the military operations in the Donbas region. 30 — 35 mines have been shut down in the ATO zone. In July miners extracted 315,000 t of solid fuel below the target.

«We addressed Premier Arseniy Yatsenyuk, Vice Premier Volodymyr Groisman, Energy Minister Yuriy Prodan, Minister of Agrarian Policy Ihor Shvaika, Chairman of the National Commission for State Regulation in the Energy Sector Serhiy Titenko and CEO of the Employers Federation Ruslan Ilyichev asking to cancel the limitation of daily consumption of electric power and limitation of capacity for oil processing companies,» says Kapshuk.

Processors are indignant

The Poltava Oil Extraction Plant, which is a part of the Kernel Group, was set a daily consumption of power at the rate of 40,000 kWh. Smooth operation of the enterprise requires 85,000 kWh daily, says the letter from the Kernel Group to Ukroliyaprom. «Reduction of energy consumption at our company is technically impossible, because production is based on a closed loop cycle that cannot be interrupted, because the production line is continuous and the operation mode is round-the-clock,» says Director of the Poltava Oil Extraction Plant Serhiy Danylchenko. He notes that an attempt to change the process would increase the likelihood of an emergency situation, which could result in a fire or an explosion.

For the Kirovohrad enterprise Gradoliya power consumption was reduced by 1,600 kWh per day. Its director Volodymyr Umrykhin warns that it will stop the plant and create difficulties in signing export contracts and settling accounts for loan obligations. The fixed limits are sufficient for the Creative PJSC for now, because currently preventive maintenance is being performed at two OEPs, so they are temporarily not operating, says Chairman of the Board of Directors of the company Yuriy Davydov.

Staying ahead

Ukroliyaprom raised the alarm in advance, says General Director of the Ukrainian Agribusiness Club Association Volodymyr Lapa. «The peak of processing accounts for September. If enterprises agree to such terms now, in September the reduction of limits could be extended,» he says.

Limitation of power consumption by agrarians could be revised because it is a strategic sector of the Ukrainian economy, says Lapa. Earlier, the government made a decision on full provision of agrarians with natural gas.

Director of ProAgro Communications Company Mykola Vernytskiy believes that transition to alternative energy sources may be the way out of this situation. «Pellets are sold, while foreign energy is consumed, because it is cheaper,» says the expert. Davydov notes that Creative’s factories have already introduced such technologies: the group covers 70 — 75% of its energy needs by burning pellets.

In case of the extension of power limits, says Kapshuk, oil processing companies will have to abandon export contracts which they will not be able to execute because of the down time. According to Ukroliyaprom, the oil and fat industry brings the country close to US $300 mn in foreign exchange earnings every month. According to the State Statistics Service, during the first seven months of this year Ukraine exported sunflower oil to the amount of US $2.24 bn.

Kapshuk says that currently there are 47 oil-extracting enterprises in Ukraine, 3 — 4 of which will not work, because they are located close to the ATO zone.