Page 11 - FSUOGM Week 37 2021

FSUOGM PROJECTS & COMPANIES FSUOGM

Lukoil agrees terms with authorities

for Perm catalytic cracker

RUSSIA RUSSIAN oil producer Lukoil has reached a Like other Russian oil and gas producer,
preliminary agreement with local authorities in Lukoil is seeking to expand its petrochemicals
The project is backed Russia's Perm region to build a catalytic cracking capacity to make its business more robust amid
by an investment deal complex at its refinery, the company reported on an uncertain outlook for oil demand and add
Lukoil reached with the September 8. value to its products. The company also broke
energy ministry. Details of the memorandum of understand- ground on a new polypropylene plant at its refin-
ing (MoU) that Lukoil signed with the Perm ery in Nizhny Novgorod in late July, which will
government were not shared, although sources boast a capacity of 500,000 tpy.
told NewsBase that it should outline local tax and
other fiscal terms governing the project. Lukoil Restoring upstream
held a groundbreaking ceremony for the facility Lukoil and other Russian producers have
in late August, although NewsBase understands honed their focus on downstream improve-
that fiscal terms need to be finalised with the ments over the past year while their ability to
local government before the project can go ahead expand upstream has remained constrained
in earnest. as a result of OPEC+ cuts. But those cuts are
The project is backed by an investment agree- steadily easing.
ment that Lukoil reached with Russia's energy OPEC+ members agreed at the start of Sep-
ministry, which will provide the company with tember to bring back 400,000 bpd of oil supply
a subsidy on refining feedstock in return for a in October, signalling growing confidence in the
commitment to invest in upgraded capacity. The market's recovery. The decision is in line with
ministry has agreed similar arrangements with a plan the cartel members agreed on in July to
other Russian refiners, as part of a broader push restore 400,000 bpd of production every month
to upgrade the country's refining industry, which until the end of the year. For Russia, this means
still produces large volumes of fuel oil and other a monthly increase of 100,000 bpd is permitted.
low-value products. In a board meeting on August 31, Lukoil
Russia's ambition is to produce more high- president Vagit Alekperov said that more than
er-end light products such as gasoline and half of the wells the company shuttered in May
diesel, increasing domestic supply and adding 2020 when OPEC+ cuts came into force have
value to exports. Moscow would rather sell more now resumed flow. The company will "continue
high-quality refined fuels than ship more unre- scaling up oil production in Russia in line with
fined crude oil for less value. the evolution of external restrictions," Alekperov
Lukoil's catalytic cracking complex is due said.
online in 2026 and will process up to 1.8mn Lukoil production totalled 19.5mn tonnes
tonnes per year (tpy) of feedstock at full capac- (1.55mn bpd) in the second quarter, marking a
ity. It will enable the 263,000 barrel per day (bpd) 2.5% increase year on year. Its overall hydrocar-
refinery to produce more high-quality motor bon output recovered 4.2%, thanks to stronger
fuels and launch production polymer grade pro- growth in gas extraction. The company slashed
pylene, which Lukoil will use as feedstock at its its oil flow by 310,000 bpd in May last year but
petrochemical facilities. has since restored 130,000 bpd. ™

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