1. Antimonopoly Service Officials Warn of Fuel Deficiency, but Private Capital Builds the Largest Oil Refinery in the Ural

Antimonopoly Service Officials Warn of Fuel Deficiency, but Private Capital Builds the Largest Oil Refinery in the Ural

04.03.2013

Against the background of information emerging over and over again about likely fuel deficiency in Russia, national oil refineries are of special interest. As of today there are no large oil refineries in the Ural Federal District, where more than 60% of Russian oil and more than 90% of natural gas are extracted, and even the Tyumen Region itself which supplies natural resources has to purchase oil products. The situation is to be changed in connection with the construction of Antipinsky Oil Refinery, a private project, in which a former fellow student of Putin has had a hand.

According to forecasts made by antimonopoly service officials in 2015 fuel deficiency in the country can grow by 70 times and reach 3.7 million tons. The Ministry of Energy, in its turn, reports that the majority of Russian regions are steadily supplied with fuel, there are permanent reserves for the period of 10 days and more, except for the Omsk Region, where reserves are traditionally inconsiderably reduced.

Pessimistic forecasts of antimonopoly service officials are based, in particular, on the fact that oil companies won’t manage to modernize oil refining enterprises in time for the purpose of producing new Euro-5 and Euro-4 fuels.

According to the Federal State Unitary Enterprise “Central Dispatching Department of Fuel and Energy Sector”, there are no large oil refineries in the Ural Federal District.

Surgut Condensate Stabilization Plant with the capacity of 8 million tons of condensate per year and 13 mini oil refineries with the total capacity of primary processing of about 5.5 million tons of crude oil are engaged in crude oil refining.

The Ural Federal District has been formed in such a way that there are practically no plants. “Major oil refineries remain in Bashkiria and Omsk,” Aleksei Kokin, senior oil-and-gas analyst of Uralsib Financial Corporation has pointed out in his interview with Nakanune.RU correspondent.

However, the situation is to change after completion of Antipinsky Oil Refinery construction project.

In the long run Antipinsky Oil Refinery may become the only private, but not a governmental, project, with the refining capacity of 7.5 million tons p.a. (from 2013), the quality of oil products conforming with Euro-5 standard (from 2014), and the processing depth up to 94% (from 2014).

It is worth of noting that most of oil and natural-gas reserves are concentrated in the Tyumen Region. Nevertheless, the region has to acquire light oil products from other regions in the volume of some 1.2 million tons, in particular, from Omsk Oil Refinery (550 kilometers far from Tyumen), Ufa Oil Refinery (800 kilometers far), and Permnefteorgsintez (600 kilometers far).

Maria Yashmetova, assistant to Chairman of the Board of Directors of Antipinsky Oil Refinery CJSC, told Nakanune.RU, that as of today Antipinsky Oil Refinery is not producing gasoline.

The enterprise focuses on the production of diesel fuel so far. “Transfer to Euro-5 high octane gasoline is planned after commissioning of the gasoline reforming unit with the catalyst permanent regeneration and isomerization block in the 1st-2nd quarter of 2016. As from 2016 the production volume of Euro-5 high octane gasoline will amount to 500 thousand tons per year,” Maria Yashmetova mentioned.

According to the data from public domain, Antipinsky Oil Refinery belongs to the New Stream Group controlled by businessman Dmitry Mazurov. Professor of St. Petersburg State University Nikolai Yegorov, a former fellow student of Putin, is one of the Group’s shareholders.

According to some data, he owns a 10% share in the company. Two other shareholders are: Chairman of the Board of Directors of Antipinsky Oil Refinery Dmitry Mazurov (controlling stake), and member of the Board of Directors, Chairman of Committee for Commercial Activity Mikhail Bereshchansky. It is stated on the web site of Antipinsky Oil Refinery that Yegorov is Deputy Chairman of the Board of Directors, Chairman of the Law Committee.

It may be so that due to good relationships the enterprise can soon become the largest oil refinery in the Urals Federal District.

The enterprise is located in close proximity to the developed logistic network: railway and motorway infrastructure is accessible. In 2018 the refinery will be considered as ready in full after commissioning the facilities, where gas oil is reformed into commodity product.

Antipinsky Oil Refinery is connected to the oil trunk pipelines of Transneft JSC with the total capacity of 6 million tons p.a., taking into account the refinery’s development, including the third phase.

Meanwhile, according to Nakanune. RU, Antipinsky Oil Refinery intends to by a low-loaded oil pipeline from Transneft in order to use it for pumping light fuel to the Kurgan Region and then into the system of product pipelines. This information was reported to Nakanune. RU by its source in the oil industry. However, nothing is definite to this effect yet, because according to the source data, Transneft suggests another variant, namely: the company will buy some part of the pipeline (about 400 km) and Antipinsky enterprise will supply fuel to Transneft. They don’t officially comment on this information at the Refinery.

According to Aleksei Kokin, senior oil-and-gas analyst of Uralsib Financial Corporation, the Oil Refinery’s access to the “pipe” will reduce its costs and facilitate transportation of its products. “It is the matter of logistics. Such branches of the trans-oil pipeline system are not always used at full capacity. It will result in improved fuel supply to the Kurgan Region, but the Kurgan Region is not the largest area of consumption,” the expert noted.

“On Russia’s national scale Antipinsky Oil Refinery will scarcely influence on the overall balance of oil refining, but locally for the Tyumen Region, for Yugra, this enterprise will be able to facilitate fuel availability,” he added.

Vladimir Sysoyev, deputy of the Tyumen Regional Duma (local parliament), noted in his interview with the Nakanune. RU correspondent that, first of all, one should give proper respect to investors which in due time decided to invest funds in oil refining in the south of the Tyumen region. “It was, of course, a paradox: oil is available, but no oil refining,” Sysoyev emphasized.

“Antipinsky Oil Refinery is already functioning, though it produces only diesel. As far as it is known the Refinery has received orders for one year and a half. Taking into consideration the fact that the building of the international airport is being reconstructed in Tyumen for creating an interregional and international transportation hub, it is probably worth of thinking for the Oil Refinery about production of jet kerosene,” Vladimir Sysoyev advised.

“Some 800 people are working at the Oil Refinery now, and after running at full rated capacity it is planned to create 1.5 thousand of jobs. You must admit that it is a serious indicator. Being one of the major taxpayers, the company is, certainly, a very serious organizer of the employment process among population,” deputy of the Tyumen Regional Duma Viktor Burtny explained the importance of the Oil Refinery for the region.

Sergei Degtyarev, deputy of the Duma of the Khanty-Mansi Autonomous Area, in his turn, skeptically said that the oil refinery located nearby wouldn’t exert influence on Yugra. “New sources can be found, but as of today the area, where the major share of Russian oil is produced, provides itself with fuel in full, there is no fuel deficiency there,” Sergei Degtyarev said.

The Yugra deputy also noted that potential cooperation between the area and the enterprise will depend on the management team of the refinery. “Everything will depend on the marketing work at the Oil Refinery. If they offer lower prices and cooperate with the area in this field, all that will be very advantageous. But, first and foremost, everything will depend on the management team of the Oil Refinery,” Sergei Degtyarev added.

In the meantime oil-industry workers will be compelled to carry out modernization at the Refinery, though the construction of all new refining facilities doesn’t seem to be a trend so far.

“We see that there is a number of companies which are constantly modernizing oil refineries, for example, Rosneft, LUKOIL, Bashneft, Alliance, and others. Therefore, such forecast (about fuel deficiency – note of Nakanune.RU) may be made in order to give a chance and a good argument to the government for the purpose of compelling and expediting the process of modernization,” Aleksei Kokin, senior oil-and-gas analyst of Uralsib Financial Corporation, pointed out.

“By 2016 many projects for modernization of oil refineries are to reach planned indices. Though, in any case certain difficulties can always arise in some regions where one or another oil refinery can fall behind,” senior expert of the Energy and Finance Institute Sergei Agibalov added.

Back to the list