The former U.S.S.R.'s refining industry during 1992 is likely to face its most difficult year since the late 1940s, before all war damaged facilities and cannibalized equipment were placed back on stream.
Utilization of primary processing capacity in the now dissolved Soviet Union is expected to fall to the lowest level in more than four decades.
In 1990, the U.S.S.R. processed 9.112 million b/d of crude. With primary capacity estimated at about 11.6-11.7 million b/d, refinery utilization even then was apparently less than 80% and falling.
UKRAINE EXAMPLE
At Ukraine's Lisichansk refinery, one of the largest in the new Commonwealth of Independent States, utilization of primary capacity late last year was only 50%.
Overall Ukrainian refinery throughput was about 1.12 million b/d until last year. But oil production in the second most populous republic in the C.I.S. is only 104,000 b/d and at the lowest point since the early 1960s.
Russia's failure to supply Ukraine with enough oil to meet its needs was a significant factor in growing tension between the two republics late last year and early in 1992.
Throughout the U.S.S.R., new and technologically advanced secondary refining units were completed far more slowly than planned during the 1980s and early 1990s. Domestically generated capital for refinery upgrades has virtually dried up, and promised big infusions of foreign funds have yet to show significant results.
CRUDE SHIPMENTS SLIDE
Crude deliveries are declining rapidly even to refineries in the Russian republic, which provides about 90% of oil production in the 12 member C.I.S. At least eight of the commonwealth's republics fall short of being self-sufficient in oil production. A ninth, Azerbaijan, doesn't have enough crude flow to feed its refineries adequately.
At the Moscow refinery, product distribution often doesn't go to customers in accordance with government plans even when production is normal.
Instead, a large portion of the Moscow plant's production is bartered for food rather than being sold for almost worthless rubles.
When Russia is able to provide crude for other C.I.S. republics, promised deliveries are not made as scheduled because Russian storage and transportation facilities "are in an extremely precarious condition," the Moscow press reports.
OBSOLETE EQUIPMENT
Besides shortfalls in crude deliveries, commonwealth refineries must contend with other major problems. More than 70% of C.I.S. refinery equipment is obsolete and needs replacement.
The U.S.S.R. hoped to increase its "depth of refining," or proportion of light products obtained from processed crude, to about 70% by 1990. Instead, Moscow says, the figure was only 63.1% "vs. more than 90% in the U.S.," with most of the remainder being mazut (heavy fuel oil).
Official data show the depth of Soviet refining was 61% in 1970 and dropped to 56% in 1980. It then rose slowly to 58% in 1985, 59% in 1986, 60% in 1987, and 62% in 1988 and 1989.
Prospects appear dim for substantial improvements in depth of C.I.S. refining before the mid-1990s without large loans being made quickly available by Japan, South Korea, the Persian Gulf nations, and the U.S.
COPING WITH SHORTAGE
Even before the huge drop in oil production during 1990 and 1991, Soviet officials decided that increased depth of refining would be a far less costly way of coping with the U.S.S.R.'s shortage of light products than attempting to raise liquid hydrocarbon flow and total refinery throughput.
They estimated the nation could obtain about 30 million metric tons (219 million bbl) more motor fuel in 1995 from the same amount of oil refined in 1990 by increasing refining depth to 70.6%.
If the refining depth remained at the 1990 level, more than 10 billion rubles in added capital spending for higher crude production could be required to achieve the same gain in motor fuel production.
Now, with crude flow plummeting rather than holding steady and only bleak prospects for attaining goals for greater refining depth, Moscow officials are emphasizing the need to switch millions of vehicles from oil based fuels to compressed and liquefied natural gas.
Copyright 1992 Oil & Gas Journal. All Rights Reserved.
