Russia Oil and Gas Competitive Intelligence <strong>Report</strong> 2010 Oil & Gas Infrastructure Oil Refineries With a total processing capacity of 5.62mn b/d in 2009 according to <strong>the</strong> BP Statistical Review, Russia is <strong>the</strong> world’s third largest refiner after <strong>the</strong> US and China. Although <strong>the</strong> vast majority of this capacity dates from Soviet times, <strong>the</strong> country’s largest players such as Rosneft have invested in upgrading <strong>the</strong>ir facilities to meet stringent fuels quality standards, allowing many companies to export refined products, particularly diesel, to <strong>the</strong> EU. Russia has also followed suit in mandating cleaner fuels, introducing Euro- 4 standards at <strong>the</strong> start of 2010 and preparing for <strong>the</strong> introduction of Euro-5 standards at <strong>the</strong> start of 2014. Refineries in Russia are mostly located west of <strong>the</strong> Urals, although significant capacity exists in Siberia – particularly West Siberia – along major pipelines. The country’s major refining centre is in <strong>the</strong> Volga- Urals regions around <strong>the</strong> Republics of Tatarstan and Bashkiria. Large refining cities include Ufa, <strong>the</strong> capital of Bashkiria, Samara and, fur<strong>the</strong>r to <strong>the</strong> west, Yaroslavl. Rosneft is <strong>the</strong> largest player in <strong>the</strong> Russian refining sector, with seven major refineries, a total capacity of 1.13mn b/d and a market share of nearly 21%. O<strong>the</strong>r major companies involved in refining include Gazprom Neft with 964,000b/d (18%), Luk<strong>oil</strong> with 894,000b/d (16%) and TNK-BP with 560,000b/d (10%). There are also several slightly smaller refiners such as Surgutneftegaz, Bashneftekhim and Tatneft, as well as a small number of companies operating individual plants. Almost all refiners in Russia also control upstream assets, allowing companies to supply <strong>the</strong>ir own refineries through Transneft’s pipeline systems. The few companies that do not have upstream involvement generally operate plants of less than 50,000b/d, a category that toge<strong>the</strong>r accounts for around 115,000b/d of Russian capacity. Ryazan Refinery: TNK-BP’s Ryazan facility is <strong>the</strong> company’s largest and most up-to-date refinery, with a nameplate capacity of 340,000b/d. As part of its wider downstream expansion plans, <strong>the</strong> company is investing US$150mn in <strong>the</strong> construction of an isomerisation unit at <strong>the</strong> plant. Following <strong>the</strong> introduction of tighter regulation regarding <strong>the</strong> lifecycle of road bitumen in 2010, TNK-BP looks likely to increase investment at <strong>the</strong> plant, which can produce <strong>the</strong> company’s polymer-modified TNK Alfabit brand of premium bitumen. Komsomolsk Refinery: Rosneft’s Komsomolsk refinery in Russia’s Far East is supplied with crude <strong>oil</strong> by rail from Western Siberia, over 2,000km away, as well as by pipeline from Sakhalin from Rosneft subsidiary Sakhalinmorneftegaz. The motor and jet fuels produced by <strong>the</strong> refinery are currently exported to Japan, South Korea and Vietnam via <strong>the</strong> Nakhodka tanker terminal and <strong>the</strong> Vanino tanker terminal. Planned Additional Capacity: In June 2007, Rosneft CEO Sergei Bogdanchikov announced plans to expand <strong>the</strong> company's refining capacity ninefold by 2015. Rosneft is currently upgrading its Tuapse and Komsomolsk refineries and said in 2008 that it was looking into constructing a new 240,000b/d plant near <strong>the</strong> port of Primorsk in Russia’s Far East, in partnership with Surgutneftegaz. <strong>Report</strong>s in October 2009 © Business Monitor International Ltd Page 67
Russia Oil and Gas Competitive Intelligence <strong>Report</strong> 2010 suggested that <strong>the</strong> company was considering developing a 400,000b/d refinery in <strong>the</strong> Primorskiy region with China’s Sinopec. New generation plants making products compatible with European standards allow <strong>the</strong> company to export any surplus and position it well for <strong>the</strong> eventual tightening of transport pollution emissions in Russia. © Business Monitor International Ltd Page 68
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