Logistics

Mandatory Reserves

At the end of 2008, AB Mažeikiu Nafta stored 41.5-day mandatory reserves, i.e. half of total annual reserves. The other half was covered by the State Agency Storing Mandatory Reserves, financed from government funds. Until the end of 2009, AB Mažeikiu Nafta has to cover 60-day reserves, whereas the Lithuanian State Agency will reduce its reserves to 30 days.

Oil reserves were stored at the Mažeikiai refinery, whereas finished products – at two terminals leased in Lithuania.

Pipelines

The “Przyjaźń” pipeline, used to transport oil to the AB Mažeikiu Nafta refinery until July 2006, remains closed. In 2008, AB Mažeikiu Nafta operated a section of a product pipeline from Belarus to Ventspills, Latvia, to transport diesel oil from Belarusian refineries.

Storage Facilities

In Lithuania, we operated 4 storage and cargo handling terminals for the purposes of AB Mažeikiu Nafta.

Rail Transport

The total volume of rail transport amounted to approximately 7.9 mn tonnes, of which 6 mn tonnes represented engine fuel transport. The fact that rail transport volume more than doubled compared to the previous year was due to restoring full production capacities at AB Mažeikiu Nafta after a thorough overhaul.

Given the specific character of the Lithuanian market, rail transport was contracted to the national monopolist – state-owned Lithuanian Railways, with which we renegotiated cooperation conditions and rail tariffs in 2008.

Road Transport

In Lithuania, fuel deliveries to ORLEN Lietuva stations were outsourced to one company selected in a tender procedure in 2007. JET A-1 aviation fuel was delivered to customers in Lithuania and Latvia with AB Mažeikiu Nafta own means.

Maritime Cargo Handling

In 2008, the volume of AB Mažeikiu Nafta cargo handled at seaports amounted to approximately 5 mn tonnes. The 3 mn increase compared to 2007 was due to the restored production capacities after reconstruction of a vacuum column in the Mažeikiai refinery.

We are interested in buying a cargo handling port in Lithuania in order to optimise the costs of AB Mažeikiu Nafta product export, or in starting cooperation with other Baltic ports, using ORLEN Group’s logistics infrastructure.