In Expectation Of Euro-5


Tyumen plans to transfer to the production of oil complying with the most stringent ecological standard already in the coming years.

Federal Nezavisimaya Gazeta has published an article by Timur Khakimov, the analyst of Tyumenskaya Oblast Segodnya, touching upon the problems which the oil refining industry of Russia is facing and how they are solved in the region. We offer the material of our colleague to the readers.

Administrators, scientists, and experts have been speaking for many years about the lagging of Russian oil refining sector behind industrially developed countries of the world. The small processing depth of the ‘black gold’, the wear and tear of fixed assets, the low quality of finished products provide for continuing dependence of the economy on the raw-material sector.

That is why experience of private-public partnership amassed over the past ten years in the West Siberia is extremely valuable in the existing situation what will give rise to the production already in the nearest future of fuel complying with Euro-5 standard which today is the most stringent European ecological standard regulating the content of harmful contaminants in exhaust gases.

Not rosy prospects
In all respects – only these words can be used to describe the lagging of the Russian oil refining sector behind that of the world. Thus, according to the data provided by Elena Chernysheva, deputy chairman of the oil refining technology department at the Russian State University of Oil and Gas named after Gubkin, the share of domestic kinds of gasoline meeting the requirements of Euro-3 and Euro-4 standards accounts for 38 percent of the total volume of produced gasoline, whereas the share of the diesel fuel meeting the requirements of classes “4” and “5” makes up merely 18%. But it should be noted that Europe is preparing to introduce stricter requirements to fuel – Euro-6 standard …

The volume of crude oil refining in the country is growing, but a very small processing depth of the output results in the significant amount of low quality oil products which are not in demand on the domestic market and are exported as semi-finished goods. As a consequence our foreign competitors receive high added value.

Rinat Galiev, General Director of the Russian National Oil Refining R&D Institute, explains the existing situation by the fact that in the former Soviet Union priority was given to swelling oil extraction volumes, that is why primary distillation plants supplemented with gasoline catalytic reformers and diesel-fuel light hydrotreating units were constructed at oil refineries. Far less attention was paid to secondary, deepening processes.

Hence, the indices are as follows: in the USA catalytic cracking facilities account for 35 percent while in Russia for 6.6 percent of the oil refining volume, in the USA hydrocracking facilities account for 9 percent and in Russia for 0.4 percent, and so on.

For the sake of fairness it should be said that some documents intended for making the owners and investors of Russian oil refineries to implement modernization have been adopted on the state level. Thus, according to the General Scheme of Oil Industry Development for the period until 2020 in 2009 the government declared its plans on leveling export duties for dark and light oil products for the purpose to encourage deeper oil refining.

In response to the abovementioned and with due account of the technical regulations adopted in 2008 oil companies set to the execution of the relevant projects. In case of their implementation in full the total volume of refining in the country will swell by more than 15%.

The Energy Strategy of Russia until 2030 provides for the requirement to achieve the oil processing depth of 83% by 2020 and 90% by the document expiry. If consider that after 2009 and before 2010 the index of 70% was thought to be normal for the country the developed plans raise hopes.

A wheelbarrow without a wheel
What cannot but trouble is the obligatory raising of huge, even by oil industry standards, investments in the course of the fundamental modernization of old refineries. It is not by chance that “by popular demand” (read: by demand of major companies) the time-limits of gradual introducing technical regulations for motor fuels were repeatedly breached, thus, let’s remind you, the final transfer to Euro-3 was first postponed from 2009 to 2011 and then to 2013.

Is it worth believing that Russian national oil refiners will master the production of Euro-5 fuel at least in the coming five years? It seems that it is.

Top managers of Antipinsky Oil Refinery, the enterprise of the industry’s “middle class” from the Tyumen Region engaged in the construction of its third-phase facilities, have stated that there is such a possibility. In this connection it should be recollected that the region where 72% of Russian oil and 91% of natural gas reserves are concentrated has never had its own more or less serious refineries. Light oil products were delivered to the greater

Tyumen Region inclusive of the Khanty-Mansi and Yamal-Nenets autonomous districts overcoming the distance of 600-800 kilometers from Omsk, Perm, and Ufa.

However, according to different estimates the demand of the vast territory extending from Kazakhstan to the Arctic Ocean in fuel amounts to 5 – 15 million tons (or even more). The giant spread can be explained by the fact that experts specify very rarely if the entire great region is taken into consideration or only its southern part without districts, and they don’t mention if only gasoline and diesel fuel or all oil products in general have been accounted.

The absence of its own producer in the region inevitably leads to price instability and even to delivery interruptions. Having noticed these absurd things investors from “Neftekhimicheslie Tekhnologii”/Petrochemical Technologies Group (as of today united in the New Stream Management Company) met with regional leaders and came to understanding in respect of both, tax exemption and all-out administrative support.

Fortunately, there was a free land plot in Antipino, the suburbs of Tyumen, located in the close proximity to the oil trunk pipeline and railway. The work began humming! And so dynamically that the refinery founded in July 2004 yielded its first products already in November 2006. Though it was “merely” 400 thousand tons per year but technical modernization followed by the second work flow phase commissioning raised the total capacity of refining at Antipinsky Oil Refinery to 4.1 million tons by the 2012 yearend.

Is the market open!
– The project is the one and only due to its principally new approach to production, says General Director of the enterprise Gennady Lisovichenko. – The refinery has been built using new machinery and equipment what makes it possible to guarantee the stable output of high quality products. But no construction works of similar scale could be performed without assistance provided by the regional government. Beginning with the land-related issue we have always felt assistance which most favorably tells on the project implementation.

– Based on the example of Antipinsky Oil Refinery one can observe how the mechanism of private-public partnership operates, governor Vladimir Yakushev of the Tyumen Region points out. – For instance, farmers need a lot of fuel during sowing or harvesting campaigns and we address to all companies asking them to sell fuel to farmers at a minimal price. In this case much depends on the company: to what extent it is ready to make a discount but to benefit from the volume. Antipinsky Oil Refinery, as a rule, often responds. As for us, we consider that these are serious investments in the region’s economy and try to solve arising problems, including those related with tax benefits.

Antipinsky Oil Refinery does not rest on laurels and is building the facilities of the third phase. By the 2015 yearend the refinery is to increase its capacity up to 7.5 million tons p.a. achieving the maximum oil processing depth of 94%, and streamline the output of Euro-5 oil products. The amount of investment in the project between 2010 and 2015 will make up USD 1.5 and the number of personnel will reach 2,600.00 people by 2016.

But even the attainment by the refinery of estimated capacity won’t meet the region’s demand in POL. All the more so, modernization which is now underway at oil enterprises doesn’t contribute to the fuel market stability. Therefore, a lot of work lies in store for workers of Antipinsky, as well as for other investors intending to engage in crude hydrocarbon refining in the Tyumen Region.
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