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Transneft offers a new oil quality concept for 2018-2020

Date of publication: 21 November 2017 Printable version

In the course of an extended meeting of the Transneft Services Consumer Council, the Company’s senior executives made a number of statements in relation to future plans and prospects and answered the journalists’ questions.

On oil quality concept

Transneft offers a new oil quality concept for 2018-2020 because of the rising sulfur content in the Russian crude, informed Vice President of Transneft Sergey Andronov at the meeting of the Consumer Council. It is proposed that a new oil quality concept be approved for 2018-2020 in conjunction with the Russian Energy Ministry and oil companies, while the key provisions of the concept for 2014–2017 should be preserved, he said.

In particular, the Company proposes to continue redistribution of the sour crude production growth between export flows, permitting a higher sulfur content for crude oil in Primorsk (to 1.63% from 1.41% in 2014, with normal content standing at 1.55%), for Druzhba and Ust-Luga crude (to 1.8% from 1.61% in 2014, with normal content standing at 1.75%) and for Novorossiysk crude (to 1.55% from 1.34% in 2014, with normal content standing at 1.5%). Furthermore, it is also proposed to increase the set sulfur content for Russian refineries receiving crude oil from export flows. The Urals grade has the upper sulfur content of 1.8%.

Sergey Andronov explained that this proposal is caused by a gradual rise in the sulfur content of Russian crude oil. Thus, among the sour crude fed to the pipeline system in 2017, roughly 22% is supplied to the refineries of the Urals and Volga region, while the rest is added to the export commodity flow mix; yet this ratio keeps changing all the time and export deliveries are getting ever more sour. “An increased reception of high-sulfur crude oil is not matched by a proportionate growth of supplies to Russian refineries,” he said.

Vice President reminded that starting in 2018 the Company would increase supplies of low-sulfur crude to China by 10 million tonnes. Furthermore, after Komsomolsky refinery is connected to the Transneft system in 2018, the volumes of low-sulfur oil delivered to this refinery would increase from 6 to 8 million tonnes. “It is anticipated that in 2018 the supply of low-sulfur oil will be ensured by its redirection from the resources of the west-bound flows. This means that in 2018 low-sulfur oil will almost entirely be withdrawn from the west-bound flows, whereas we earlier used it to improve the quality of crude flowing west and to the refineries of Central Russia,” explained Sergey Andronov.

The Yug-3 project outlook

First Vice President of Transneft Maksim Grishanin informed at the Council’s meeting that the Company would freeze the implementation of the Yug-3 project until the outlook of oil refining in the Samara region becomes clear.

“The Yug-3 project from Volgograd to Samara is planned, but frozen for the time being, because, first, we do not see the volume guarantees; secondly, the project is not frozen in its entirety, since we are now doing all requisite engineering surveys, developing a project, and will submit it for approval to the State Expert Appraisal Authority. We’ll freeze the project until we clearly see what happens to oil refining in the Samara region, and until we understand where petroleum products produced in this region will be redirected,” explained Maksim Grishanin.  

On the prospects of filling the oil pipeline Kuyumba – Tayshet

“Transneft is ready to increase the throughput capacity of the Kuyumba – Tayshet oil pipeline to 15 million tonnes, but we do not see it being filled with requisite volumes of crude quickly enough,” said First Vice President Maksim Grishanin at the meeting of the Consumer Council.

“Theoretically, we plan further capacity enhancement of the pipeline system Kuyumba – Tayshet to 15 million tonnes. We’ll certainly keep watching the way this pipeline is filled. We’ll be ready to do it, but for now we do not see this pipeline to be filled with requisite amounts of crude fast enough,” he added.

Forecasting oil export

Transneft forecasts that next year oil export from Russia will rise to 242.4 million tonnes, Vice President Sergey Andronov told the journalists.

He pointed out that, proceeding from the current requests, Transneft forecasts the export of 242.4 million tonnes of crude in 2018, adding that it is premature to forecast further dynamics.

Based on the results of 2017, Transneft plans to export 238 million tonnes of crude oil.

Sergey Andronov informed that Rosneft had not notified Transneft of the possible reduction of crude oil to be fed to the system, should the agreement with OPEC+ be prolonged.

“For now we cannot forecast how the expected amount of 242.4 million tonnes of crude in 2018, up 4.4 million tonnes from 238 mln. tonnes this year, will be redistributed between refineries and export flows,” said Vice President.

In his words, given that about 10-12 mln tonnes will be redirected from west to east, “accordingly, we expect shrinking volumes on our western routes.” “Most likely this will be ports Primorsk and Ust-Luga because the Druzhba pipeline is used more for deliveries to the refinery, than for spot deliveries,” noted Sergey Andronov.

He added that for now consumers have complained about the quality of the crude oil supplied over the oil pipeline Druzhba: two complaints were lodged in 2017.

Sergey Andronov also informed that in 2018 Rosneft would supply 28.3 mln tonnes over the oil pipeline Skovorodino-Mohe and 1.7 mln tonnes – via the terminal in Kozmino, as part of the intergovernmental agreement with China.

Vice President also said that at the present time crude oil flows only westwards over the oil pipeline Zapolyarye – Purpe, and next year it will also be supplied in the western direction, this matter being related to the quality of supplied crude.

Based on the materials of INA Russia Today, NA Interfax
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