Gazprom Deputy Chairman Alexey Miller opened the new command centre at the Pancevo refinery on Monday.

Head of Naftna Industrija Srbije (NIS) Kirill Kravchenko and Serbia's Minister of Economy Nebojsa Ciric signed a strategic partnership agreement related to higher production efficiency and the financial stability of Petrohemija Pancevo. Serbian President Boris Tadic attended these events.

The modernization of the Pancevo refinery began in June 2009 and should be completed by the end of 2012.

The job is worth EUR 547 million, with EUR 396 million invested in the hydrocracking and hydroprocessing facilities. The completion of the modernization will raise the refinery's processing volume to a maximum of 4.8 million tonnes of derivatives, which will be enough for the Serbian market and export to the Balkans.

After the target capacity is reached, the petrol production will be at 638,000 tonnes every year. The production of euro diesel will go from the current 230,000 tonnes to more than 1.5 million tonnes per year. The agreement signed by NIS and the government regarding Petrohemija will allow Petrohemija to cover the losses after the first investment phase, which will get the plant working at nearly full capacity.

The necessary investments of about EUR 62 million will be secured through bank loans guaranteed by the government. The agreement also involves a restructuring of Petrohemija's debt towards NIS, Srbijagas and others, which will result in NIS becoming the largest shareholder of Petrohemija (33.6 percent), followed by the government and its companies. The management of Petrohemija will also be expanded to include experts with international experience in crisis management.

The hydrocracking and hydroprocessing complex is the largest facility being built as part of the refinery's modernizations and was included in the sale contract between the Serbian government and Gazprom, when the Russian company bought 51 percent of NIS.

The rest of the funds will be invested in a facility for hydrogen production, construction and modernization of industrial infrastructure and environmental projects.