Gazprom Neft Open to Investment in Refining Capacity Outside of Russia

By Elena Zhuk, June 7, 2014

Gazprom Neft refined less oil in 2013 than it did in 2012, with refining volumes dropping from 43.3 million tons to 426 million tons, year-on-year, Gazprom Neft CEO Aleksandr Dyukov said 6 June during the company's annual shareholder meeting. Dyukov added, "The reason for the drop was a relatively long period of reconstruction under a program of four-year maintenance cycles at refineries, as well as a lower effective rate at the Mozyr refinery due to a rise in the number of suppliers". 

Dyukov said that at the same time, the lower volumes did not affect the effectiveness of the refining process. "Carrying out quality-improvement projects not only allowed us to retain profits in the refining sector, but to increase them as well", he said.

Under its refinery modernization program which is aimed at improving the quality of the company's oil products, a light naphtha izomerization unit and gasoline hydrotreatment catalytic cracking unit and diesel fuel hydrotreatment were installed at the YANOS refinery.

As a result of this modernization drive, since 2013 all of Gazprom Neft's facilities have moved to producing extremely low-sulphur content fuels faster than stipulated by the Russian government. At the completion of the program to improve oil product quality,

After completing the quality improvement program, the company began the second stage of modernizing its refining power. This has resulted in increasing refining depth to 94%.

In 2013, the company's sales of oil products through high-margin channels rose almost 5% to 23.9 million tons. The main segments of growth were bunker oil, jet fuel, motor fuels and lubricants. Also of note was a redistribution of volumes sold in favor of retail rather than small wholesale outlets. Specifically, sales to Gazprom Neft filling stations in Russia grew 8%, reaching a record of 19 tons in the Russian oil sector.

Gazprom Neft plans to keep refining volumes in Russia at a stable level, while at the same time studying the possibility of gaining access to refining capacity outside of the country.

"We have reached the optimal level for loading our refining capacities in Russia and we do not have the goal of loading them further", Deputy Gazprom Neft General Director of Logistics, Anatoliy Cherner told journalists, "We have reached a level of 39 million tons, and that is essentially our strategic level - we plan for refining in Russia to be at a level of 40 million tons of oil. Outside of the country, we refine about 2.5 to 3 million tons in Serbia and have a tolling scheme for refining at the Mozyr refinery of about 1 million tons of oil", he added.

Cherner said that the company's previous goal of increasing refining capacity outside of Russia remained pertinent. He said the focus would be on north-west Europe where refining capacity in Germany was being considered. "This should be capacity that comes at a fair price in a location with well-developed refining infrastructure that does not require additional investment", he said.

Gazprom Neft aims to achieve access to refining