Page 8 - FSUOGM Week 20 2021

FSUOGM INVESTMENT FSUOGM

Rosneft signs refining

investment deals

RUSSIA RUSSIA’S state-owned Rosneft has signed gas supply to power its future refining operations
investment deals with the energy ministry to in the Russian Far East and is counting on Gaz-
The energy ministry upgrade four of its refineries. prom to provide it. In a letter to the government,
has entered into such The agreement covers the construction a copy of which was seen by Russia’s Kommer-
agreements covering of new processing units at the company’s sant daily, Rosneft CEO Igor Sechin said Gaz-
upgrades at 14 Novokuibyshevsk, Syzran, Tuapse and Komso- prom had not yet confirmed it could supply this
refineries in total. molsk refineries. In return for investing in the amount.
projects, Rosneft will secure a so-called “reverse Most of the gas, some 2.3 bcm per year, will be
excise tax premium” for a certain undisclosed required at Rosneft’s planned Far East Petroleum
period. Co. (FEPCO) refining and petrochemicals com-
The energy ministry has entered into such plex. Another 0.5 bcm per year will be needed
agreements covering upgrades at 14 refineries in at Rosneft’s existing Komsomolsk refinery and
total, including facilities operated by Gazprom slightly more for a metallurgical plant and a
Neft, Lukoil and Tatneft. shipyard.
To be eligible for these investment deals, com- Rosneft has been trying to advance FEPCO
panies must commit to projects worth at least for years and quietly shelved the project in 2019.
RUB50bn ($680mn) that must be completed by Suggesting the plan could be revived, however,
2026. All in all, the programme is expected to Sechin wrote to Putin in September last year
lead to the development of around 30 advanced requesting benefits, namely negative excise
processing units at a cost of around RUB1 trillion duties on its naphtha and crude oil feedstock, to
over the next six to 10 years. make FEPCO feasible.
Despite various investment programmes over Under its first stage, priced at RUB700bn
the years, Russia remains the biggest exporter of ($9.3bn), FEPCO is slated to process up 12mn
heavy fuel oil (HFO), produced through basic tonnes per year (240,000 barrels per day) of
refining techniques and considered the dregs crude oil and produce 8mn tpy of gasoline, diesel
of the process. HFO has been losing value over and other refined fuels, along with 3.4mn tpy of
the years, especially due to increasingly strin- petrochemicals. Its output would double under
gent environmental standards on marine fuel a second stage, which would bring overall costs
imposed by the International Maritime Organi- to RUB1.5 trillion.
sation (IMO) and governments. Moscow wants On the fuel sales front, the Swiss trading
to encourage refineries to upgrade their capacity office of Azerbaijan’s state-owned SOCAR has
to produce more higher-value products such as signed a contract to export and sell Rosneft’s
gasoline, diesel and jet fuel. oil products in Ukraine, according to Ukrain-
ian media reports. SOCAR could commence
Far East refining the sales as early as May, although it is con-
In other Rosneft news, the company has esti- sidered that supplies will more likely begin in
mated it will need 3.7bn cubic metres of natural June. ™

P8 www. NEWSBASE .com Week 20 19•May•2021