OREANDA-NEWS.On October 22, Tatneft announced that it had cut off crude supplies to the Kremenchug refinery in Ukraine on Friday, October 19. Earlier on Friday, the former head of the refinery, who was loyal to Tatneft, was removed and the company lost operational control of the refinery, Alfa Bank's information department disclosed. Currently, Tatneft has no refining capacities in Russia. All of its crude is refined at the Kremenchug refinery, which has an annual capacity of 18 mln metric tons. Tatneft's crude oil represents approximately 80% of the total refinery's throughput.

In the view of Alfa Bank's experts, if crude supplies to the Kremenchug refinery are not resumed in the near future, Tatneft will have to direct its produced and purchased crude oil volumes (approximately 400,000 metric tons per month) to the domestic market. It is less likely to increase exports because significant volumes of Tatneft's heavy oil would lead to a decrease in the quality of the crude blend exported by other Russian companies. "The increased supply on the domestic market will most likely result in a marginal decline in domestic crude prices. We believe the situation will have a negative short-term effect on Tatneft, as the company has no alternative to its refining capacities in Ukraine. We are currently revising our rating and target price for Tatneft's stock," the experts stated.