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UPDATED 1 Sept: The EI library in London is temporarily closed to the public, as a precautionary measure in light of the ongoing COVID-19 situation. The Knowledge Service will still be answering email queries via email , or via live chats during working hours (09:15-17:00 GMT). Our e-library is always open for members here: eLibrary , for full-text access to over 200 e-books and millions of articles. Thank you for your patience.
FSU refining capex to reach $9.8bn by 2020
The Former Soviet Union (FSU) is forecast to spend approximately $9.8bn on new refining capacity between 2014 and 2020, adding over 400,000 b/d, according to research and consulting firm GlobalData. The additional capacity will result primarily from new refineries being built in Russia and Turkmenistan, along with an expansion project in Kazakhstan.
Carmine Rositano, GlobalData’s Managing Analyst covering Downstream Oil & Gas, says that Russia’s refining projects will be geared towards upgrading its existing facilities and meeting lower sulphur specifications mandated for domestic use, rather than increasing its capacity. ‘Russia’s refining sector manufactures a significant amount of heavy fuel oil, having exported around 1.6mn b/d in 2013. Demand for this product is expected to decline steadily, due to regulations calling for lower sulphur levels in fuel oil used by tankers on international waters. As a result, Russia’s tax and export duty regulations have been adjusted to provide incentives for refiners looking to build upgrade units to manufacture cleaner, low-sulphur products and reduce their fuel oil output.’
In addition to Russia’s upcoming refinery construction projects, plans in the FSU include an expansion project in Estonia and at the Pavlodar refinery in Kazakhstan, the latter of which will contribute $1bn towards the region’s total capital expenditure during the forecast period.
Rositano continues: ‘Russia is likely to construct upgrade units at its existing refineries to crack fuel oil into gasoline and ultra-low-sulphur diesel, aimed at both the domestic market and for exporting to Europe. Additional lower-priced diesel imports entering Europe from FSU and US projects, alongside new reefing capacity in the Middle East, could force a number of Europe’s smaller facilities to close over the next few years.’
