- •Contents
- •Foreword
- •Industry snapshot
- •Industry snapshot
- •Reserves
- •Oil output
- •Oil output
- •Gas output
- •Gas output
- •Refining
- •Refining
- •Upstream
- •Upstream
- •Oil output
- •Gas output
- •New wells
- •Well-stock management
- •Well productivity
- •Reserves
- •Reserves
- •Oil reserves
- •Gas reserves
- •Reserve replacement
- •Reserve replacement
- •Refining
- •Refining
- •Capacity, throughput, utilisation
- •Light products yield
- •Complexity
- •Complexity
- •Modernisation plans
- •Capex
- •Capex
- •Oil & gas sector capex
- •Crude exports
- •Crude exports
- •Crude exports by market, company and direction
- •Russian crude exports in the FSU context
- •Crude export proceeds
- •Refined products exports
- •Refined products exports
- •Analysis by product
- •Gas balance
- •Gas balance
- •Domestic sales
- •UGSS balance
- •Appendix I: Reserves classifications
- •Appendix I: Reserves classifications
- •Russian reserves definitions
- •Western reserves definitions
- •Appendix II: Pricing
- •Appendix II: Pricing
- •Monthly pricing trends
- •International crude oil pricing
- •Domestic crude oil pricing
- •Domestic product pricing
- •International gas pricing
- •Domestic gas pricing
- •Gas tariffs
- •Appendix III: Regulation and tax
- •Appendix III: Regulation and tax
- •Regulatory overview
- •Licensing
- •Environmental protection
- •Oil and product transportation
- •Transportation costs
- •Typical crude export route costs
- •Volume and price controls for gas
- •Tax regime
- •Mineral Extraction Tax (MET)
- •Crude-export duty
- •Excess profits tax
- •Specific taxes applied to natural gas
- •Taxation of offshore projects – special treatment
- •Appendix IV: Sanctions
- •Appendix IV: Sanctions
- •Summary
- •Appendix V: Who’s Who
- •Appendix V: Who’s Who
- •Key policymakers
- •Company heads
- •Disclosures appendix
vk.com/id446425943
Refining
Renaissance Capital
20 June 2019
Russian oil & gas
Supplies to Russian refineries began to slump after 1990 and bottomed out in 1998, as did refinery utilisation. Since that time rising crude output has allowed for a steady increase in domestic processing, even though the resulting products have tended to be exported whenever possible. Capacity utilisation has therefore been on the rise, peaking at 93.5% in 2012, according to BP data. Refining capacity utilisation declined to 86.5% in 2017 due to a deterioration in refining profitability on the back of an oil price decline and implementation of the tax manoeuvre, rebounding in 2018 as new secondary capacities improved the quality of the Russian refining basket.
Russia’s refining capacity represented some 6.6% of the world total in 2018, according to BP’s Statistical Review of World Energy, while Russia’s domestic consumption of oil products amounted to 3.2% of the world total, including refinery claims and losses. While Russia exports substantial volumes of oil products, its domestic consumption is also significant (Figure 11).
Russia still over-refines, although we expect utilisation rates will decline
Figure 11: Russian refining indicators, mnt
|
2001 |
2002 |
2003 |
2004 |
2005 |
2006 |
2007 |
2008 |
2009 |
2010 |
2011 |
2012 |
2013 |
2014 |
2015 |
2016 |
2017 |
2018 |
|
Domestic product consumption |
127 |
122 |
126 |
125 |
125 |
130 |
130 |
134 |
128 |
133 |
142 |
145 |
144 |
152 |
144 |
148 |
146 |
146 |
|
Refinery throughput |
178 |
185 |
190 |
195 |
207 |
220 |
229 |
236 |
236 |
250 |
258 |
268 |
273 |
289 |
282 |
279 |
280 |
287 |
|
Non-CIS product exports |
70 |
87 |
77 |
70 |
92 |
104 |
96 |
108 |
113 |
127 |
120 |
121 |
141 |
156 |
163 |
148 |
137 |
139 |
|
CIS product exports |
2 |
2 |
3 |
3 |
3 |
4 |
6 |
8 |
8 |
5 |
5 |
17 |
10 |
10 |
8 |
8 |
11 |
11 |
|
Note: Domestic consumption includes refinery fuel and losses. |
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Source: Ministry of Energy, BP's Statistical Review of World Energy 2019, Interfax, InfoTEK, Federal Customs Service, Renaissance Capital estimates |
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Figure 12: Capacity, throughput, and utilisation of Russian refineries, kb/d |
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|
2001 |
2002 |
2003 |
2004 |
2005 |
2006 |
2007 |
2008 |
2009 |
2010 |
2011 |
2012 |
2013 |
2014 |
2015 |
2016 |
2017 |
2018 |
|
Russian refinery throughput |
3,584 |
3,717 |
3,817 |
|
3,912 |
4,172 |
4,423 |
4,597 |
4,742 |
4,765 |
5,018 |
5,185 |
5,438 |
5,636 |
5,926 |
5,773 |
5,715 |
5,703 |
5,833 |
Russian refining capacity |
5,536 |
5,444 |
5,313 |
5,316 |
5,398 |
5,514 |
5,471 |
5,387 |
5,425 |
5,563 |
5,721 5,816 6,279 6,417 6,523 |
6,594 |
6,596 |
6,596 |
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Utilisation |
64.7% |
68.3% |
71.8% |
|
73.6% |
77.3% |
80.2% |
84.0% |
88.0% |
87.8% |
90.2% |
90.6% |
93.5% |
89.8% |
92.3% |
88.5% |
86.7% |
86.5% |
88.4% |
Source: Ministry of Energy, BP’s Statistical Review of World Energy 2019, Interfax, InfoTEK, Renaissance Capital estimates
According to Russia’s Federal Customs Service, Russia’s oil product exports totalled
150mnt in 2018 – up 1% YoY but 12% below the historical maximum of 172mn tpa reached in 2015, which marked an end to the upward trend in product exports since 2004, as the tax incentives to refine and export oil products diminished with the implementation of the tax manoeuvre and a decline in oil prices.
In addition to the tax adjustments, the government was pushing oil companies to modernise domestic refineries to comply with new European fuel standards. While Russian product exports have been on the rise since 2004, they consisted mostly of heavy refined products or straight-run products, which were sold to more complex European refineries for conversion into high-quality fuel. This provided a steady stream of cheap cash flow, but eventually left the domestic market undersupplied in quality fuels. These efforts (discussed in detail later in this report) have pushed for a strong trend in refining modernisation, which resulted in falling product exports (see Refining, page 45) and made more crude available for export compared with the refiners’ golden age of 2014-2015. The companies invested heavily in downstream modernisation over the past several years and enhanced product quality significantly as a result. Downstream modernisation has had a positive effect on refining margins, partially offsetting negative effects from fiscal changes. However, with a substantial decline in refining profitability there is less incentive for oil & gas companies to modernise further.
Refinery upgrades, new fiscal regime and more export infrastructure suggest more crude exports ahead
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