Former Soviet Union Refining Capital Expenditure to Hit $9.8 Billion by 2020, According to a New Study on ASDReports

Tuesday 24 February 2015, Amsterdam

The Former Soviet Union (FSU) is forecast to spend approximately $9.8 billion on new refining capacity between 2014 and 2020, adding over 400 thousand barrels per day.

The company’s report, now availabe on ASDReports, states that the FSU’s additional capacity will result primarily from new refineries being built in Russia and Turkmenistan, along with an expansion project in Kazakhstan.

This report says that Russia’s refining projects will be geared towards upgrading its existing facilities and meeting lower sulfur specifications mandated for domestic use, rather than increasing its capacity.

Rositano states: “Russia’s refining sector manufactures a significant amount of heavy fuel oil, having exported around 1.6 million barrels per day in 2013.

“Demand for this product is expected to decline steadily, due to regulations calling for lower sulfur levels in fuel oil used by tankers on international waters. As a result, Russia’s tax and export duty regulations have been adjusted to provide incentives for refiners looking to build upgrade units to manufacture cleaner, low-sulfur products and reduce their fuel oil output.”

In addition to Russia’s upcoming refinery construction projects, plans in the FSU include an expansion project in Estonia and at the Pavlodar refinery in Kazakhstan, the latter of which will contribute $1 billion towards the region’s total capital expenditure during the forecast period.

Rositano continues: “Russia is likely to construct upgrade units at its existing refineries to crack fuel oil into gasoline and ultra-low-sulfur diesel, aimed at both the domestic market and for exporting to Europe.

“Additional lower-priced diesel imports entering Europe from FSU and US projects, alongside new reefing capacity in the Middle East, could force a number of Europe’s smaller facilities to close over the next few years.”