Moscow Drinks Downstream Roundtable Summary

Downstream roundtable: Plant modernisation strategies - increasing the economics and efficiency of your plants


Moscow, 21st September, 2016


The Downstream roundtable involved representatives from Russia’s leading technology and engineering companies, oil refineries and academies. The roundtable provided an opportunity for participants to discuss the most pressing issues in Russia’s refining and petrochemical sectors.

Roundtable participants highlighted several main subjects which are of strategic importance for the development of the downstream industry in the country. Amongst them mentioned include challenges of modernization and reconstruction of refineries, the need for deeper oil refining and the production of higher quality light oil products.  The participants also touched upon the recent oil industry tax reform, in particular the new tax manoeuvre and its influence on the refining industry. The tax manoeuvre aims to improve production margins and refinery modernization, but conversely will dramatically reduce refining margins, a pain point for many plants.  The prospects of scale tax reform in Russia will see oil refineries optimize excess capacities of any unprofitable primary processing, but will also see some of the country’s refineries become unprofitable.

Increasing refining depths and increasing the share of light oil products is a priority for major refinery modernization programmes in Russia.  Production of high-quality gasoline, aviation gasoline and quality petrochemical products will be possible with the implementation of new hydrocracking installations in refineries.

Historically reliant on technology imports, the development of local content and domestic capabilities over foreign engineering and technology is a very predominate issue and priority for the modernization and construction of projects in Russia.  Acquisition of licenses from foreign companies is one of the problems that interferes with import substitution.  Another necessary condition for import substitution is financing local R&D programs.

Another topic that was mentioned during the roundtable is Rosteknadzor’s tough standards and refineries’ ability to comply with them. Some of the acquired technologies from abroad need to be adjusted in order to comply with Rosteknadzor’s standards which is a very costly process.

A final pressing issue for refineries is the maximizing the utilization of associated petroleum gas. USA is probably one of the best case studies, where utilization of associated petroleum gas reaches 99%.

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