May 25, 2019 / 4:22 PM / 6 months ago

Russia's Zarubezhneft agrees gas supply deal to Bosnian refinery

SARAJEVO, May 25 (Reuters) - Russian state-owned oil company Zarubezhneft has signed a deal to supply natural gas to a Bosnian oil refinery it owns, reducing local pollution by replacing the heavy fuel oil currently used to help run the plant, Croatian news agency Hina reported.

The deal aims to solve problems in the Croatian town of Slavonski Brod, where authorities and residents have long complained about pollution from the Brod oil refinery just across the border in Bosnia.

The Brod refinery, which processes 1.2 million tonnes of crude a year, is majority owned by Zarubezhneft’s Neftegazinkor unit.

Under the deal, Croatian company Crodux Plin will adjust a 5.5 kilometre pipeline to carry the gas, while state-owned Plinacro will connect the Brod refinery to Croatia’s gas system.

Over the next 10 years, Crodux Plin will supply the refinery with natural gas worth about 200 million euros ($224 million), and will invest 24.5 million kuna ($3.7 million) in the construction of a direct gas pipeline, said Crodux energy director Branko Radošević.

Zarubezhneft’s General Manager Sergey Kudryashov said the refinery, which in January halted operations for an overhaul, would resume production after the gas pipeline had been connected in 2020.

Croatia’s President Kolinda Grabar-Kitarovic, who said she had clinched the deal with Russia’s President Vladimir Putin, called on officials to start implementing the agreement as soon as possible to improve air quality in Slavonski Brod. ($1 = 0.8927 euros) ($1 = 6.6236 kuna) (Reporting by Daria Sito-Sucic Editing by David Holmes)

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