SOVIETS' PRODUCT SHORTAGE GROWS WORSE

The U.S.S.R.'s shortage of refined petroleum products now extends across the board and is the most severe since the end of World War II. Soviet supplies of light products have been increasingly tight for several years. That's due in part to the inability of the U.S.S.R.'s generally obsolete refineries to produce more gasoline, diesel fuel, and aviation jet fuel.

Nov. 11, 1991

7 min read

The U.S.S.R.'s shortage of refined petroleum products now extends across the board and is the most severe since the end of World War II.

Soviet supplies of light products have been increasingly tight for several years. That's due in part to the inability of the U.S.S.R.'s generally obsolete refineries to produce more gasoline, diesel fuel, and aviation jet fuel.

Now, with crude production and deliveries to refineries plummeting, the Soviet fuel shortage is being made worse by inadequate production of what the Soviets call "mazut," the bottom of the barrel heavy fuel oil that has traditionally been in relatively abundant supply.

Meantime, the Soviets are considering plans for upgrading their refineries in conjunction with efforts to boost oil production and back out fuel oil use by substituting natural gas.

Eastern Bloc Energy (EBE), a publication of Eastern Bloc Research Ltd., Newton Kyme, England, provided a thumbnail sketch of the Soviet refining sector in its October issue.

Perhaps nowhere is the need for refinery upgrades in the sundering U.S.S.R. greater than in the Ukraine, according to EBE research. Review of process needs will certainly lead to joint ventures with foreign equipment/services suppliers, EBE said, possibly in return for a share of increased output of light products.

SUPPLIES HIT BOTTOM

The Moscow newspaper Pravada disclosed the mazut crunch in a front page article headlined "Freezing Weather Is Near, But Fuel Supplies Have Hit Bottom." It said in the Russian republic alone, 1991 production of mazut through mid-October had fallen several million metric tons below last year's production on the same date.

What's more, domestic distribution of mazut and light products is termed "chaotic" as the U.S.S.R. tries to move toward a market economy for which the nation is still largely ill prepared.

Under the U.S.S.R.'s former administrative/command economic system, almost all crude and petroleum products were sold to the central government. They were then allocated according to plans formulated by the State Planning Committee (Gosplan) and ministries in Moscow.

But a Russian republic decree has given refineries and local officials a free hand to distribute as much as 20% of petroleum products this year.

As a result, large volumes of mazut, as well as gasoline and diesel fuel, are being sold without central government control.

Vladimir Tabeyev, head of the Russian republic's main administration for distributing petroleum products, complained to Pravda he no longer knows where products are going because refineries and local officials won't disclose this "commercial secret."

In the past, when shortages of coal or natural gas occurred, Moscow could decree that more mazut be sent to areas or enterprises affected by the supply deficit. Now Soviet officials fear that if fuel oil deliveries to electrical power stations, heating plants, and other industrial sites aren't sharply increased soon a major crisis will occur next January and February.

EXPORT LICENSES

Currently, Tabeyev declared, Russian refineries in Bashkiria and the Kuibyshev (Samara) areas are violating government procurement directives by obtaining licenses to export almost 500,000 metric tons of scarce mazut in fourth quarter 1991. Tabeyev said while he agrees a market economy for petroleum products should be established in Russia, implementing such a new system will take considerable time, not just a matter of months.

He added that industry and the civilian population should not be forced to endure winter fuel shortages while producers use their new freedom to look for other customers and sign contracts that may not be beneficial to the Russian republic as a whole.

"We need a strong network of specialized commodity exchanges and other market mechanisms," Tabeyev said. "But what do we have now but a lot of talk about the need to change over to a market system?"

SOVIET REFINING SECTOR

Efforts to upgrade refineries as well as boost oil production and natural gas utilization would allow the Soviets to maintain oil exports at 3.6 million b/d while meeting domestic demand for gasoline and diesel with an optimum crude production level of 11 million b/d, EBE said.

The U.S.S.R. has 46 refineries with total primary distillation capacity of 11.62 million b/d. Capacity utilization peaked at 84.6% in 1987 before sliding to 79.7% in 1990, the publication said.

Of that capacity, the Russian republic has 7.76 million b/d-with 3.62 million b/d in the Urals-Volga region-Ukraine 1.26 million b/d, Azerbaijan 840,000 b/d, Byelorussia 600,000 b/d, Kazakhstan 420,000 b/d, Central Asian republics 320,000 b/d, Lithuania 240,000 b/d, and Georgia 180,000 b/d. There are no refineries in remaining republics.

The Soviet capacity ratings reflect a level that assumes a greater downtime than would be expected in the West, EBE noted. So a refinery that survives a year without an accident is able to process much more oil-as much as 20% more-than its rated capacity, the publication said.

CONVERSION CAPACITY

EBE's research underscores the widely acknowledged primitive state of the Soviet refining sector.

At yearend 1989, there was only 4.5 million b/d of conversion capacity in the Soviet Union. More than half of this capacity entailed 2.2 million b/d of simple hydrofining capacity, with catalytic cracking and thermal cracking-visbreakers and cokers-accounting for 500,000 b/d each and hydrocracking 130,000 b/d.

As a result, although conversion capacity utilization is very high, only a small share of refinery throughput undergoes secondary processing, EBE noted. Further, there has been no noticeable improvement since 1985 despite a 10% increase in secondary capacity (see table).

EBE also concludes:

The Soviets apparently still have a significant number of traditional thermal crackers operating.
Capacity utilization for cat crackers and reformers is respectable by international standards.
Hydrocrackers are being used at about 10% of capacity.
Use of primitive desulfurization methods remains substantial.

UKRAINE REFINING SECTOR

The high cost of moving oil by pipeline to the Ukraine and heavy demand for light and middle ends there suggest Ukrainian refineries should have a comparatively high share of secondary capacity, EBE noted.

However, the Ukraine's yield of light and medium products in 1990 was only 54.3% of throughput vs. 63% for the U.S.S.R. overall and almost 90% in the U.S.

A decline in thermal cracking resulted from scrapping of an old unit at the 372,000 b/d Kremenchung refinery, while installation of a 20,000 b/d catalytic reformer at the 450,000 b/d Lisichansk refinery in 1986 did not cause a notable rise in Ukrainian cat reformer throughput, EBE said.

At the start of 1990, 72% of all Ukrainian refining capacity was worn out and obsolete-as much as 80% at some of the older refineries, EBE said.

The only modern refinery is Lisichansk, which ran almost at capacity in 1990, with others' utilization ranging from 65% at the 72,000 b/d Lvov-Nadvornaya refinery to 90% at Kremenchung.

TECHNOLOGIES SURVEYED

Specialists at the Ukraine's Institute of Bio-Organic Chemistry and Petrochemicals in Kiev are surveying western and Soviet refinery processes in considering the refining requirements of the republic.

Among the technologies under consideration are:

For cat cracking, Total-Institute Francaise du Petroles' fluid cat cracker process, the Soviet G-43-107 combined visbreaker/hydrofiner/fluid cat cracker, and processes developed by UOP Inc., M.W. Kellogg, Stone & Webster, and Texaco Inc.
For hydrocracking, technologies by IFP, Kellogg, BASF AG, Idemitsu, Lummus Crest, Chevron Corp., Unocal Corp., and Veba Oel, as well as a Soviet light hydrocracking process.
For thermal cracking, continuous coking process by Lurgi GmbH/Ruhrgas AG, Exxon Corp.'s flexicoking process, and technologies by Foster Wheeler, Kellogg, and Lummus Crest, as well as a Soviet method that combines traditional coking in a fluidized bed with coke gasification.
For catalytic reforming, Phillips Petroleum Co.'s hydrofluoric acid technology, UOP alkylation, Soviet LI-550N isomerization and 25-8B sulfuric acid alkylation, and an IFP process.
For hydrofining, processes by Chevron, Unocal, IFP, Foster Wheeler, Lummus Crest, UOP, and the Soviet Doben process.
For production of methyl tertiary butyl ether, usually in conjunction with catalytic cracking, processes by British Petroleum Co. plc, Snamprogetti SpA, Huls AG, and the Soviet G-43-107 process.