Russia aims to increase export of light oil products to Europe

Russia is working on raising its primary oil refining volumes in order to win a bigger share of the European fuel market. Besides modernising the existing refineries and changing the national taxation system, the country is going to introduce 15 new hydrocracking units and thus boost diesel and gasoline production significantly by 2022.

Russia plans to sharply increase fuel exports and carve out a larger share of the European market following an extensive modernisation of local refineries, says Reuters citing companies' plans and analysts' reports. The modernisation of the country's biggest refineries started in 2011 after a fuel shortage crisis. Russia also changed its tax system to encourage production of cleaner and higher-quality fuel. As a result, Russian primary oil refining volumes are expected to rise by 8 million tonnes this year and repeat a record high of 289 million tonnes reached in 2014, forecasts Vygon Consulting energy advisor. Russia's export of light oil products will increase to 106 million tonnes in 2018 from around 95 million tonnes the previous year amid a decline in domestic consumption.

According to analyst at ESAI Energy consultancy Andrew Reed, widespread hydrotreating investment made Russian diesel fuel a clean product, which is suitable for Europe. While around half of all vehicles in Europe are fueled by diesel, European refineries are unable to meet domestic demand, so the region imports around 850,000 bpd of diesel. ''Exporting more clean diesel will enable Russia to continue expanding market share in Europe – to the detriment of competing exporters in the United States and the Middle East,'' Reed considers.

Russia exports oil products to European countries including Netherlands, Germany, UK and France via Port of Primorsk. Photo: Tara17

The Baltic Sea port of Primorsk, which is one of the major Russian exporting outlets, ships over 38% of oil products to the Netherlands' Port of Rotterdam, 19% to Germany, 15% to the United Kingdom and 11% to France. This year, the port plans to ship 18,3 million tonnes of diesel, while in 2019 and 2020 the supplies are meant to increase sharply to 19,8 million tonnes and 23,9 million tonnes respectively.

To guarantee the supplies, Russia intends to launch 15 new hydrocracking units. This will allow the country to produce extra 18,2 million tonnes of ultra-low sulfur diesel (ULSD), the cleanest type of diesel used by motorists in Europe, by 2022. Russian Transneft plans to increase its ULSD export by 3 million tonnes to 26 million tonnes this year.

The total diesel output could reach 22 million tonnes in case that all 27 fuel oil residue conversion units are put into operation. In addition to diesel, the new units will be able to produce up to 10 million tonnes of naphtha, which could be entirely processed to the gasoline, annually.

By Anna Litvina

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