The archaic infrastructure of the refining industry in the former Soviet Union offers a host of opportunities for foreign companies to participate in bringing that industry up to western standards. That is apparent in a study conducted by Beicip-Franlab, Malmaison, France, covering the refining capacity and structure of the Commonwealth of Independent States, Georgia, and the Baltic nations of Estonia Latvia, and Lithuania.
The former Soviet refining industry consists of 48 refineries with a combined 10.12 million b/d of crude distillation capacity, of which 6.46 million b/d is in the Russian Federation, according to Beicip.
Meantime, a report from Moscow's SovEkon Indikeitor organization noted the share of Russian oil production delivered to Russian refineries increased to 63.7% in first half 1992 from 57.7% in 1990, Eastern Bloc Energy (EBE) reported.
WHAT BEICIP FOUND
In its study of C.I.S. refineries, Beicip found:
- Distillation units are quite old, with the newest process units being secondary conversion units.
- Unit capacities are small, and there is room for numerous units in the same refinery.
- Conversion capacities are much smaller than those in the Organization for Economic Cooperation and Development (OECD) countries.
- Use of western technology is an exception.
- Most refineries are inland, posing problems in products delivery and for local markets in balancing supply/demand.
- Energy consumption is quite high compared with international standards because of the type of technology installed, unit capacities, mode of products delivery, climatic conditions, and the low cost of crude.
CONVERSION CAPACITY
Beicip noted the lack of conversion capacity in the former U.S.S.R. offers a big opening for imports of residual fuel oil conversion technology that is not available from the local technological institutes.
It said the average crude distillation unit is more than 30 years old, and the average catalytic reforming unit is more than 17 years old.
Most of the refining technologies were supplied by local research institutes and are based on locally produced catalysts. Only three catalytic reformers are based on western technology, two from UOP Inc. and one from Institute Francaise du Petrole, and one distillate hydrocracker is based on IFP technology.
The more recent refinery construction has been based on the combined units concept, integrating a hydroskimming scheme of 120,000-160,000 b/d capacity with a Soviet standardized engineering concept.
Most of the larger refineries were designed to integrate a conversion complex based on a 40,000 b/d fluid catalytic cracking unit and a 30,000 b/d vacuum resid visbreaking unit, with a standardized engineering concept based on domestic technology. The conversion scheme also can integrate vacuum distillate hydrotreating and methyl tertiary butyl ether production.
Beicip reported C.I.S. refineries are generally paired by location with the local electric power authority's power station. The power station burns heavy fuel and supplies the refinery with electric power, high and low pressure steam, and hot water. When possible, the refinery is also linked to the national electric power grid.
C.I.S. refineries are beginning to have environmental restrictions imposed. Beicip said some of the refineries have sulfur recovery capabilities, but recovery yields are quite low compared with western standards. And gas flaring is not restricted.
PRODUCTS DISTRIBUTION
The former Soviet states in all produce enough of each key petroleum product, excluding asphalt, to meet consumption.
The Russian Federation is the only area that has a surplus of all main products.
Russia's product surplus is large enough to meet the other economic regions' shortfall except for jet fuel, of which Russia has only 4,900 b/d surplus.
Product deficits in most other C.I.S. economic regions force a huge reliance on petroleum product traffic. Crude and products storage capacities are far less than those of OECD countries, and products pipelines link only a few refineries to market, Beicip noted.
About 67% of the bulk transport of petroleum products is via railroad. The next most common mode, pipeline, accounts for just 17% of product transport. About 9% is carried by road and rail short range and 7% via waterways.
PRICES
Crude prices were fixed by the government at 30 rubles/ton until January 1990. Prices were raised to 90 rubles/ton until January 1991, 350 rubles/ton until January 1992, and the government established a range of 1,8002,200 rubles/ton through May 1992.
A new floor price was fixed in September 1992, Beicip said, at 4,000 rubles/ton. Producers can sell crude oil at prices above that level provided they pay taxes on incremental income above that floor price.
Product prices have also been fixed by the government, leading to marked increases.
A-76 leaded gasoline in January 1990 sold for 57 rubles/ton, and as of May 1992 sold for 4,375 rubles/ton. Al-93 unleaded increased to 5,900 rubles/ton in May 1992 from 100 rubles/ton in January 1990.
T-1 jet fuel sold for 52 rubles/ton in January 1990, increasing to 4,300 rubles/ton last May.
Diesel increased to 4,050 rubles/ton last May from 46 rubles/ton in January 1990.
And M-40 furnace fuel oil, which sold for 31 rubles/ton in January 1990, sold for 2,275 rubles/ton in May 1992.
CRUDE QUALITY
Beicip said the crude quality varies wildly from one area to another.
Most of the refineries are in oil producing areas, but the more recent refineries have been constructed in consuming areas.
Thus, the crude quality feeding the refineries varies from place to place, but is evened out by the large volume of crude, more than 64% of total C.I.S. production, that comes from western Sibera. The western Siberian crude mix which can be compared with Arab or Iranian light crude, feeds most of the refineries.
CRUDE SUPPLIES
SovEkon reported crude distillation throughput and the output of refined products has continued to fall despite increased seasonal demand due to the harvest. Thus, gasoline supplies have continued to decline.
EBE noted deliveries to OECD countries, excluding eastern Germany, from the C.I.S. in August were up 31.2% from August 1991 and 0.4% higher in the first 8 months of 1992 than the same period a year ago. Total C.I.S. oil exports rose 20.3% in August from a year ago. That followed a similar pattern in July.
"One reason advanced in the western press for the big surge in crude oil exports during July-August is the decline in deliveries to other C.I.S. states and the inability of the Russian refineries to process all the oil being produced by Russia," EBE said. "This is not true. Russia is expected to produce 393 million tons (7.86 million b/d) this year, according to official forecasts, of which 100 million tons (2 million b/d) is destined for other C.I.S. states. Deliveries (to other C.I.S. refiners) during the first half amounted to 50 million tons (I million b/d).
"This leaves a maximum 293 million tons (5.86 million b/d) for a Russian refining industry of nominal capacity of 388 million tons/Year (7.76 million b/d) and actual capacity of perhaps 275 million tons/year (5.5 million b/d).
"That leaves a surplus of only 18 million tons (360,000 b/d), whereas crude exports are likely to reach 55 million tons (1.1 million b/d)."
Copyright 1992 Oil & Gas Journal. All Rights Reserved.
