Galichyna, Ukraine's fifth largest oil refinery, states that it will not restart its operation until the end of September, putting further upward pressure on gasoline prices in a tight market, Ukrainian Journal reports.

The refinery, which was expected to resume operation by the end of August, will spend an extra month for "modernization," a source at Galichyna said.

The refinery's continued modernization adds greater pressure on gasoline prices, with only two out of six Ukrainian oil refineries currently in operation.

The announcement comes after word that last week's technical glitch at Linos, the second oil refinery, will force the refinery to stay closed indefinitely.

Kherson Naftopererobka, the third large oil refinery, is supposed to resume operation by end of August, but its officials have been recently citing some problems that may extend the stoppage.

The price of 95-octane gasoline, the most popular gas, rose 2.7% to UAH3.85 ($0.76) per liter at most gas pumps in Kiev over the weekend, up from UAH3.75 as of the previous week.

Galichyna, which has stayed idle for most of the past two months due to high oil prices, said the modernization will allow the refinery to improve quality of the produced fuel, but also to reduce pollution, the source said.

The refinery plans to invest about UAH100 million ($20 million) for modernization of its equipment in 2005, the source said.

Galichyna, which is capable of refining about 3.2 million metric tons per year of crude, refined 890,600 tons of crude oil in January-July, down from 1.41 million tons one year ago.

Ukraine's second-largest oil refinery, Linos, owned by Russian oil major TNK-BP, was forced to indefinitely stop production of 95-octane gasoline Aug. 8 after a lightning strike damaged its reforming unit.

Lukoil-Odessa, owned by Lukoil, closed last month for a three-year repair, while Kherson NaftoPererobka, owned by Alliance Oil Company, was closed Aug. 1 for several weeks for unspecified upgrade but later indicated the upgrade may take longer.

The government plans to import 200,000 tons of gasoline in August, mostly from Lithuania and Belarus, to ease possible shortages.


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