Surgutneftegaz to switch over to Euro 5 fuel production only in 2017
Surgutneftegaz has again changed the schedule for modernising its oil refinery in Kirishi (Leningrad Region). The company will delay the commission of a hydrocracking facility for a year and of a catalytic cracking installation for two years with plans to convert to Euro 5 fuel production only in 2017. Meanwhile, government-endorsed technical regulations compel the oil companies to convert by 2015. On February 12, Prime Minister Vladimir Putin called upon them to comply with the schedule.
Surgutneftegaz has postponed the modernisation of its only oil refinery located in Kirishi (Leningrad Region). The company plans to commission its catalytic cracking installation necessary for increasing the octane rating of fuel in 2017, said Boris Levchenko, the Kirishi refinery's deputy technical director, yesterday, as quoted by the Interfax agency. The hydrocracking installation will go on-line in late 2010. According to Levchenko, the catalytic cracking installation will make it possible to increase the production of fuel meeting the Euro 5 standard to 99% of the total. The cost of the installation is 185 billion roubles ($5.54 billion, or €4.04 billion).
Surgutneftegaz had planned to complete its modernisation effort earlier. Last spring, Vadim Somov, director general of the Kirishi refinery, said the hydrocracking installation would be ready by the end of this year, with startup to take several more months. In 2007, Vladimir Bogdanov, director general of Surgutneftegaz, said they would have the catalytic cracking installation in 2012, but then Vadim Somov began to talk about 2015. When the modernisation is complete, the refinery's annual processing capacity will double - from 12 million to 24 million metric tons of oil. The refinery declined to explain the delay, and the newspaper failed in attempts to contact Surgutneftegaz yesterday.
The delay in schedule may create problems for Surgutneftegaz. Recently, the government postponed the introduction of new technical regulations at the oil companies' request. The use of Euro 2 petrol, which had to be banned from 2009, will be allowed through 2010, Euro 3 through 2011, and Euro 4 until late 2014 (see the Kommersant issue of December 8, 2008). However, starting in 2015, production of fuel not meeting the Euro 5 standard will be banned.
The oil companies asked the government to extend the timeframe for another seven to ten years, said Prime Minister Vladimir Putin yesterday (see Page 2 for more detail on his meeting with oil companies' top managers). However, the government did not support the idea. "With all our respect and concern for the oil sector, I can say that we have other economic sectors as well, including the automotive industry. They invest in the manufacture of new equipment and investments are being made on the basis of plans we have revealed previously," Vladimir Putin said yesterday.
Experts at the Kortes information and analytical centre say that only small amounts of Euro 5 fuel can be produced without catalytic cracking technology. However, the oil companies are not sure that in 2015 petrol consumption will be at a level ensuring a return on investment, says Denis Borisov, an analyst with the Solid investment company. Fuel from the Kirishi refinery could be exported to Europe, but instead of the projected 1.5% rise in the demand for petrol in 2008, the year-end results showed a 0.9% fall.
Denis Rebrov