Russia's refinery utilization plummets to 55%

July 19, 1999
The Russian refining industry is in deep crisis. Throughput at refineries owned by Russian firms fell to 165.7 million metric tons last year vs. 294.6 million tons in 1990. This decline has brought average capacity utilization down to a dismal 55%.

The Russian refining industry is in deep crisis. Throughput at refineries owned by Russian firms fell to 165.7 million metric tons last year vs. 294.6 million tons in 1990. This decline has brought average capacity utilization down to a dismal 55%.

These data were reported recently by Eastern Bloc Research Ltd. (EBR), Tadcaster, U.K., in its Eastern Bloc Energy report.

Production of automotive fuels at Russian plants has dropped by 45% since 1990. Showing even greater reductions are: outputs of lubricants, bitumen, coke, and aromatics, which are down 50-67%; and production of solid paraffins, basic petrochemicals, and carbon black feedstocks, which have fallen 84-86%.

The financial state of Russia`s oil refineries is equally grim. During 1998, Russia`s refiners increased their debts to oil producers, the government, and refinery workers by 2 billion rubles to 27 billion rubles.

The plants, however, were owed 15.9 billion rubles by products distributors and exporters at yearend.

Bankruptcy proceedings have begun for some plants. And at least one-the Krasnodar refinery, operated by a subsidiary of Rosneft-has been declared bankrupt.

Improvement program

While the Russian refining industry has continued its financial downslide throughout the decade, the quality of refined products has improved. The proportion of gasoline that is unleaded has grown to 81%, and high-octane grades (AI-91 and above) account for 44% of gasoline production. In addition, 88% of the country`s diesel output has 0.2% sulfur or less.

These reductions were made under a federal fuel and energy program. The production targets of the program-60-65% unleaded gasoline output and 85% reduced-sulfur (0.2%) diesel-have been exceeded by Russia`s refineries.

EBR says, however, that the goals were achieved because of proportionally greater throughput declines at Russia`s oldest and worst-equipped plants, some of which have been shut down entirely because of Russia`s economic woes. If the economy picks up again and these plants are restarted, much of the environmental gains of the Russian refineries would be wiped out.

Refurbishment

Russia`s federal refinery modernization program is not faring well, EBR reports.

Of the 38 new units planned for start-up during 1996-98, only 8 are operating. The main reason for the delays is lack of financing. During 1996-98, only 20% of the planned investment capital for refineries was spent.

"A number of plants are almost ready for commissioning, but work on them has practically stopped because of the shortage of money," EBR said. These include: atmospheric and vacuum distillation units at the Syzran and Ukhta refineries, an alkyation unit at Omsk, a catalytic reformer at Kstovo, and a lube additive plant at Yaroslavl.