Waiting for new volumes
Experts say that supply of heavy fuel oil to the bunkering market of the North-West of Russia is likely to change in 2008 after a hydrocracking plant with annual capacity of 2.93 million tonnes of vacuum gas oil is put into operation at Kirishinefteorgsintez Refinery. According to the forecasts, it may influence the situation with heavy fuel oil supply as the Refinery is the main supplier of this product in the region.
Group of suppliers
St. Petersburg and the Leningrad region are linked with many refineries of Russia. The region requires not only huge volumes of motor and burner fuel but it also needs a lot of bunker fuel as the largest Russian port hub with numerous container, dry cargo, oil and passenger terminals.
In 2006, some twenty companies used to supply burner fuel (mostly for energy sector and for bunkering of vessels). The group of leaders comprised three refineries accounting for 46% of all heavy fuel oil supplied to the region. The group was traditionally headed by Kirishinefteorgsintez (30% of all burner fuel supplied to St. Petersburg and the Leningrad region).
LUKOIL-Ukhtaneftepererabotka OJSC supplied about half a million of heavy fuel oil in 2006 ((17% of total volume supplied to the region). The plant owned by LUKOIL provides the region with a low-sulfur heavy fuel oil for vessels sailing within SECA zones (subject to restrictions as regards sulfur content in bunker under international convention MARPOL). Besides the above two leaders the group included Moscow Refinery accounting for 9% of total supply.
The share of the rest companies was 54%. The group of Samara refineries supplied 7% as well as the group of Ufa refineries and Omsk refinery.
Besides, PermNOS accounted for 6% of the total volume, Nizhnekamsk Refinery - 5%, NizhegorodNOS - 2%, SlavatNOS - 2%, YaroslavNOS - 2%, Ryzan Refienry - 1%.
Leaders’ plans
Next year, Kirishinefteorgsintez and LUKOIL-Ukhtaneftepererabotka will increase export of burner fuel. As of today, domination of Kirishinefteorgsintez is determined also by low output of light products – heavy fuel oil makes some 50% of crude delivered to the refinery. Next year, introduction of a hydrocracking plant will allow the refinery to raise total production and the share of light products. Besides, IG Petromarket forecasts the refinery will export the majority of heavy fuel oil.
According to IG Petromarket, primary distillation at Kirishi Refinery will total 19.7 million tonnes in 2007 (-2%, year-on-year). Production of burner fuel is forecasted at the level of 10.4 million tonnes (+1.9%) including 9.7 million tonnes to be exported (+8%).
The forecast for 2010 says that Kirishinefteorgsintez will increase primary crude oil distillation to 21.0 million tonnes with a slight decrease of burner fuel output (8.7 – 8.9 million tonnes) and burner fuel export (8.0 – 8.3 million tonnes).
The other leader of the market - Ukhtaneftepererabotka is likely to raise its primary crude distillation and supply of burner fuel. Analysts forecast it at the level of 4.1 million tonnes (+8%, year-on-year) and 1.0 million tonnes (+11%, year-on-year) respectively. Export of burner fuel is to grow by 8% to 9.7 million tonnes).
According to the forecast of IG Petromarket, in 2010 Ukhtaneftepererabotka will decrease its primary crude distillation as compared with 2007 to 4 million tonnes, while the output of burner fuel is to be below the level of 2006 – 0.8 million tonnes including 0.6 million tonnes to be exported.
In early 2007, a visbreaking plant was put into operation at the refinery. Having no influence on sulfur content the process decreases the viscosity of heavy fuel oil, which makes it more applicable as a bunker fuel component.
Information provided by PortNews IAA: In the first half of 2007, the sales of heavy fuel oil at the bunkering market of St. Petersburg totaled 757,000 tonnes (+22%, year-on-year).
Aleksandra Zubacheva, head of the project “Oil Products Market” of IG Petromarket