At 31 December it was already 2.4 mil. working hours that Slovnaft Petrochemicals employees worked without any accident, which would require sickness absence. This positive trend still persists. The last work accident with sickness absence happened in the company more than 3 years ago.

According to available data of European refining and chemical associations, it is an extraordinary achievement not only in Slovak but also international terms. International Association of Oil and Gas Producers, which registers the lowest level of injury from the relevant international associations, recorded 1.7 accidents per 1 million hours, while the CEFIC (European Chemical Industry Council) 6.7 and CONCAWE (Conservation of Clean Air and Water in Europe) 2.5 accidents per 1 million hours worked for year 2007.

Slovnaft Petrochemicals s.r.o. is a 100% subsidiary of SLOVNAFT, a.s., which specializes in production and sales of polymers, particularly polyethylene and polypropylene. Slovnaft Petrochemicals, together with the Hungarian company TVK in Tiszaujvaros forms the petrochemical division of the international MOL Group, which is with annual petrochemical capacity of 1.2 million tones the largest producer of petrochemical products in Central Europe and is also an important player in Europe.

Despite this year’s extensive planned general revisions of key production units, crude oil processing in the Slovnaft refinery in the first half of the year 2008 was lower by only 4.3% y/y. The company processed no less than 2.7 million tonnes of crude oil, petrol production decreased year-to-year by 53,700 tonnes and diesel production by 41,300 tonnes. In H1 2008 Slovnaft produced exclusively diesel with low sulphur content, while 77% of that was the diesel with FAME bio-component.

In the first half of 2008 Slovnaft produced exclusively bio-petrol with ETBE. „Despite extensive planned general revision of key production units, the company succeeded in keeping a sound financial performance in Q2, too. In parallel, successful revisions established preconditions for a good operational reliability and results in the coming period,“ Slovnaft CEO Oszkár Világi commented on the results.

The total volume of refinery product sales on the domestic market for the first 6 months of 2008 increased year-to-year by 7.2%, particularly due to increased sales of diesel and jet fuel due to dynamic development of the Slovak economy. As a consequence of unfavourable external environment for the petrochemical industry (production of polymers), which resulted in high input prices for the industry and planned overhaul in Slovnaft Petrochemicals, s.r.o., sales revenues from the polymer sales in H1 2008 dropped year-to-year by 8.6%. Total revenues from domestic sales of refinery and petrochemical products in H1 2008 amounted to SKK 16.86 billion, and year-to-year increased by 30.7%. As a consequence of the general revisions, the volume of refinery product sales at export markets in the first half-year dropped by 7.7%. Total export revenues in H1 2008 amounted to SKK 42.56 billion and year-to-year were higher by 16.2%.

The volume of fuel sales in Slovnaft´s retail chain in the first half of 2008 slightly exceeded the previous year’s level. While sales of diesel as well as ECO+ Autogas further increased, sales of petrol year-to-year slightly decreased. Improved performance continued in sales of complementary goods and services at the petrol stations, where revenues increased year-to-year by 12 %. Slovnaft operated 209 petrol stations as of the end of June 2008 that is 1 station less compared to the year before.

In H1 2008, the Slovnaft Group recorded operating profit amounting to SKK 3.5 billion, that is year-to-year drop by 32%. The net profit was SKK 2.87 billion, and was year-to-year lower by 32%. The main reasons behind this development was the planned revisions performed and continuously strengthening Slovak koruna, which in H1 2008 gained 18% against USD and 5% against EUR.

Capital expenditures of the Slovnaft Group in the first six months of this year reached SKK 2.2 billion, that is almost three-fold value compared to the same period of 2007. Investments were directed particularly in ecological projects and projects focusing on ensuring the operational reliability.

Economic growth in Slovakia and competitiveness of Slovnaft products resulted in 8.7% year-to-year increase of refinery product sales on the domestic market in volume terms in Q1-3 2008. Demand for diesel, kerosene and bitumen was driven by the growing industry production, construction works and service sector.

As a result of executed turnaround of the key production units in H1 2008 resulting in lower crude processing and production and the strong GDP growth in Slovakia, in spite of the continuous demand increase for biofuels on the export markets, the total volume of refinery products sold in Q1-3 2008 was lower by 6.7% compared to Q1-3 2007. However, export remains the main driver of the Group’s results.

Total sales revenues of refinery products increased by 27% compared to Q1-3 2007 to SKK 81 bn in Q1-3 2008 and were positively influenced by high crude oil and crude oil product quoted prices. The average crude price in Q3 2008 achieved the level 114.8 USD/bbl and was higher by 40 USD/bbl when compared to Q3 2007.

The retail sales volume in Q1-3 2008 remained on the level of Q1-3 2007, despite the strong competition. Diesel and ECO+ Autogas sales showed a continuous increasing trend and gasoline sales stagnated. ECO+ Autogas sales were triggered mainly by the cancellation of excise duty from the 1 July 2008. At the end of September 2008, the company operated 209 filling stations.

Despite moderately improving external environment for the petrochemical industry in Q3 2008 compared to the first half of the year, polymer sales by petrochemical division of Slovnaft Group were down year-to-year by 11% to SKK 13.95 bn.

On one hand the executed general turnaround affected operating profit of the Group, on the other hand it created preconditions for good operational reliability in the following periods. The Slovnaft Group operating profit was SKK 3.29 bn in Q1-3 2008, what represents 44% of profit generated during Q1-3 2007. The results were influenced also by continuously strengthening Slovak crown against USD (18%) and EUR (7%) and a significant fall in crude oil price. Net profit was SKK 2.68 bn, down by 56% y/y.

“Q3 2008 performance of the Slovnaft Group was in line with the development of key parameters in the external environment. In spite of worsening market conditions due to the global financial crisis, Slovnaft has been able to maintain its position of a reliable and high-quality business partner,“ Mr Oszkár Világi, CEO of SLOVNAFT, a.s. commented the results.

In Q1-3 2008, crude oil processing was lower by 149.4 kt as a result of scheduled turnaround of the key production units realized in this period. Production of motor gasoline was lower by 68.6 kt, while production of motor diesel was higher by 35.3 kt.

During Q1-3 2008, only motor diesel with low-sulfur-content was produced, thereof 78% represented production of motor diesel with the content of bio component FAME (Fatty acid metylester). Slovnaft produced only bio gasoline with ETBE (ethyl tertiary butyl ether) content in this period.

Capital expenditures reached SKK 3.0 bn during the period Q1-3 2008. This was twice as much as a year ago. Investments were focused on the ecological projects and projects aimed at improvement of operational reliability.

After the last-year record-breaking crude oil processing, Slovnaft has managed to increase the processing also in Q1 2008, namely by more than 10 % to 1.5 million tonnes. In spite of turnarounds commenced in March 2008, this was positively presented in higher production of diesel by 54 kt in comparison with the first quarter of 2007, out of which 76 % represented diesel with FAME bio component. The production of gasoline decreased y/y only by 16 kt, while Slovnaft has already produced only gasoline with a bio component.

In spite of the turnarounds in the refinery, the sales of refinery products on export markets in Q1 2008 remained on the last-year level. In Q1 2008 the Slovnaft Group has generated three quarters of its revenues from export sales. Compared to Q1 2007, the total sales of refinery products on the domestic market increased in volume terms by 8.4 %. This was mainly driven by an increase in the sale of diesel and jet fuel, in particular due to a permanently increasing demand caused by a strong economic growth. The Slovnaft Group has continued in increasing of production and sales of plastics as well. Total revenues from products sales (both refinery and petrochemical) were higher by 30.6%, and for the first three months of this year they reached SKK 28.5 bn. In retail, the trend of dieselisation has continued as well as increase in sales of ECO+ gas fuel.

“Strong performance of the year 2007 continued also in Q1 2008 when Slovnaft succeeded to further increase its crude oil processing, and strengthen production and sales of motor fuels and polymers. These were achieved despite starting the general turnaround of the key refinery production units aiming at maintaining high operational reliability and the position of the most efficient refinery in Europe. Slovnaft continues in stable and reliable supplies for the domestic and also export markets also during the turnaround", commented Mr. Oszkár Világi, CEO of SLOVNAFT the results.

In spite of thehigh production and sales volumes of motor fuels and plastics, the operational profit of the SLOVNAFT Group was lower by 18% y/y at the level of SKK 1.5 bn. The net profit in Q1 2008 reached SKK 1.2 bn, which represents a drop by 16% compared with the same period of the last year. This development was caused, in particular, by commencement of the aforementioned turnarounds as well as by continuous strengthening of the Slovak crown against the USD (by 16 %). The average crude oil price in Q1 2008 reached the level of 96.9 USD/bbl and if compared with Q1 2007 it increased by almost 40 USD/bbl.

Capital expenditures of the Slovnaft Group in Q1 2008 reached the sum of SKK 616 million, which represents an increase by 65 %. The investments were directed mainly to ecological projects, projects aimed at ensuring operational reliability and enhancement of the efficiency. In 2008, the Slovnaft Group expects to double capital expenditure in comparison with the last year.