December 5, 2008
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Home / Issue Archive / 2007 / November #11 / VP for Refining, Alexander Sapronov, Tells Why Rosneft is Best

№ 11 (November 2007)

VP for Refining, Alexander Sapronov, Tells Why Rosneft is Best

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_editor_Sapronov-1.jpgThe acquisition of new downstream assets by Rosneft in the six months of 2007 helped the company establish itself as a leader in the Russian oil refinery sector. Alexander Sapronov, vice president of Rosneft, tells about the company’s new plans.

Oil&Gas Eurasia: Could you please estimate Rosneft’s oil processing capacity for 2007, taking into account the new refineries?
A. A. Sapronov: The total volume of the company’s oil processed by the facilities of Rosneft, including the refineries acquired at auctions, will be approximately 40 million tons in 2007.
The total production volume of the company’s oil refinery complex will be more than 48 million tons of oil, establishing Rosneft as the leader among Russian refiners.
The company’s share in the total amount of oil processed in the Russian Federation will be more than 21 percent. The utilization factor of the Rosneft refineries will average 90 percent, and at the Tuapse, Komsomolsk and Achinsk refineries this value will be even bigger.

OGE: Rosneft is currently reconstructing two refineries, in Tuapse and in Komsomolsk. At what stage of implementation are these projects? What will be their new design capacity and depth of refining after reconstruction?
Sapronov: At the Komsomolsk-on-Amur refinery we have proceeded to the second stage of the plant’s reconstruction, which includes building a complex for deep oil refining. In May and June 2007 we commenced the construction of the delayed coking unit, and a hydrocracking unit is currently being designed. These two keystone projects are the basis of the 2nd stage of reconstruction. Their realization will help the refinery reach a depth of refining of 95 percent. The yearly production capacity will also increase from the current 7 million to 8 million tons.
I’d like to say a few words about the first stage of the Komsomolsk refinery’s reconstruction. Realization of that project provided for substantial renewal of the enterprise’s fixed assets. It included constructing new process plants and modernizing existing plants for primary distillation, hydroskimming, isomerization, etc. The current fixed capital depreciation of the Komsomolsk Refinery is 21 percent.
Intensive development of engineering designs for the main process plants is part of the Tuapse refinery’s reconstruction plan. Lengiproneftehim Research Institute has completed the AVT-12 primary distillation process plant’s engineering design. The tender for the primary contractor to take upon the construction of the first start-up complex within the refinery reconstruction project is getting closer to the stage of the results announcement. In addition, the construction of gas facilities, oil storage facilities and other units of the oil refinery’s infrastructure is part of the reconstruction project.
The Tuapse Refinery’s post-reconstruction production capacity will reach 12 million tons with 95 percent depth of refining.
After reconstruction is complete, the Komsomolsk and Tuapse refineries will stop producing fuel oil. Light oil products will prevail in the production pattern: high-grade petrol and diesel fuel that meets the Euro-4 and Euro-5 standards. I should note that even now the Komsomolsk refinery is producing diesel fuel which is up to the Euro-5 standard. This was possible after the 2006 installation of the hydrocracking unit, which implemented state-of-the-art technologies.

OGE: Does the company have plans to reconstruct or re-equip the newly acquired oil refineries?
Sapronov: The company’s  divisions, in cooperation with international experts, are working intensively on the program to reconstruct and improve the oil refineries acquired at the auctions. The provisions of this program appear in the company’s business plan for 2008 – 2012, which is currently being developed.  The main purpose of reconstruction is to increase the depth and volume of refining, improve the quality of oil products, and raise them to the Euro-3 and Euro-4 standards.

OGE: How is the company going to reduce production costs at the refineries?
Sapronov: Since the acquisition of the refineries, the cost of oil processing services at the new plants has been substantially reduced. We keep working at cost optimization and consider it one of the key methods of improving the NK Rosneft refinery complex’s competitiveness.

OGE: What is Rosneft’s attitude toward petrochemistry development?
Sapronov: Rosneft purchased in an auction the Angara Polymer Plant, which produces petrochemical products. The company is preparing a program for this facility’s development, and thereby expects to substantially increase the production output of ethylene, polyethylene and other products the plant manufactures.

OGE: Does the company have any plans to acquire new refineries abroad? What is the current situation with establishing a joint venture in China’s downstream sector?
Sapronov: The company monitors options to extend its oil refinery assets. Such issues demand a comprehensive approach: we consider the logistics and marketing conditions of the regions where the oil refineries are located, the level of competition, etc. Now it is too early to talk about any actual assets.
About the joint venture in China, I can tell you that we have already completed the registration process in the downstream sector. The next stage is defining prospects and working out the development program project and the business plan.

OGE: The next question is on new technologies necessary to maintain competitiveness: does the company have its own subdivisions for innovation and development, and does it collaborate with any scientific or research institutes?
Sapronov: The company has its own reliable base of design and scientific corporate institutions, numbering about 10. There is also a Corporate Research and Development Center. All of them work for our business and help introduce innovations, new technologies and innovative solutions.
Dozens of Russian and foreign engineering and design-expert companies and institutions facilitate the realization of our projects. We choose them by tender, which helps engage the best specialists in our work and extend our potential.  

OGE: Does the company have an environmental protection program for the refinery complex?
Sapronov: This is a key issue in all our projects. For example, the Tuapse refinery is located in a resort area. The reconstruction project has a provision that the maximum allowable concentration after the commissioning of the new plant should not exceed that of the current refinery. We held a public consultation in the city of Tuapse, and after people familiarized themselves with the materials we presented they supported our project.
The business plan of each refinery includes substantial investments to reduce process stress and maximize industrial and ecological safety.
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