You are here

Nearly USD 10bn to be spent on CIS downstream sector between now and 2020

06th August 2014

The former Soviet Union (FSU) is forecast to spend approximately USD 9.8bn on new refining capacity between 2014 and 2020, adding over 400 thousand barrels per day, according to research and consulting firm GlobalData

The former Soviet Union (FSU) is forecast to spend approximately USD 9.8bn on new refining capacity between 2014 and 2020, adding over 400 thousand barrels per day, according to research and consulting firm GlobalData
In addition to Russia’s upcoming refinery construction projects, plans in the FSU include an expansion project in Estonia and at the Pavlodar refinery in Kazakhstan, the latter of which will contribute USD 1bn towards the region’s total capital expenditure during the forecast period

The company’s report states that the FSU’s additional capacity will result primarily from new refineries being built in Russia and Turkmenistan, along with an expansion project in Kazakhstan.

Carmine Rositano, GlobalData’s managing analyst covering downstream oil and gas, says that Russia’s refining projects will be geared towards upgrading its existing facilities and meeting lower sulphur specifications mandated for domestic use, rather than increasing its capacity.

“Russia’s refining sector manufactures a significant amount of heavy fuel oil, having exported around 1.6 million barrels per day in 2013,” said Rositano.

“Demand for this product is expected to decline steadily, due to regulations calling for lower sulfur levels in fuel oil used by tankers on international waters. As a result, Russia’s tax and export duty regulations have been adjusted to provide incentives for refiners looking to build upgrade units to manufacture cleaner, low-sulphur products and reduce their fuel oil output.”

In addition to Russia’s upcoming refinery construction projects, plans in the FSU include an expansion project in Estonia and at the Pavlodar refinery in Kazakhstan, the latter of which will contribute USD 1bn towards the region’s total capital expenditure during the forecast period.

 “Russia is likely to construct upgrade units at its existing refineries to crack fuel oil into gasoline and ultra-low-sulphur diesel, aimed at both the domestic market and for exporting to Europe.

“Additional lower-priced diesel imports entering Europe from FSU and US projects, alongside new reefing capacity in the Middle East, could force a number of Europe’s smaller facilities to close over the next few years.”

Got a news tip? Email news@oilandgastechnology.net