Russia will be the growth engine of the refining industry in Former Soviet Union, as the country is set to add the most planned refining capacity among all the countries in the region over the period 2018–2022, according to data and analytics company GlobalData.
The company’s report Refining Industry Outlook in Former Soviet Union to 2022 states that in 2018, Former Soviet Union will account for 8.3% of the total global refining capacity. The total refining capacity in the region is expected to increase from 8.8 million barrels per day (mmbd) in 2018 to 9.6 mmbd in 2022.
Former Soviet Union is expected to have an estimated capital expenditure (capex) of US$16.3 billion on new build projects, of which around 59% will be spent by Russia and the remaining will be spent by the other major countries in the region, during the outlook period.
In Former Soviet Union, Russia has the highest planned refining capacity additions of 426.8 thousand barrels per day (mbd) in 2022, which will result in an increase in the country’s total refining capacity from 6.5 mmbd in 2018 to 6.9 mmbd in 2025. The country also has the highest capex spending of $9.7 billion to be spent on the upcoming refineries between 2018 and 2022.
Russia is planning to build new refineries for uninterrupted supply of refined products to the domestic market and also to export to overseas. The refineries have been strategically planned nearer to areas rich with crude oil reserves.—Soorya Tejomoortula, Oil & Gas Analyst at GlobalData
GlobalData identifies Uzbekistan as the second highest in Former Soviet Union in terms of capacity additions. The country is expected to add about 100 mbd of refining capacity in 2022 through Jizzakh refinery, which will increase the country’s total refining capacity to 325 mbd. A planned investment of $2.2 billion is expected to be spent by the country, during the outlook period, on the new build project.
Estonia is the third highest contributor to the refinery capacity growth in Former Soviet Union. The country’s refining capacity will increase slightly by 60 mbd as the planned Sillamae refinery is expected to start operations by 2019 with a capacity of 60 mbd. The country is also expected to spend an estimated capex of $49 million for the development of this topping-type refinery.
(Topping refineries are simple refineries with a distillation column and nothing else. A distillation column separates crude oil into different petroleum products based on differences in boiling points.)
Among the upcoming refineries in the region, Nakhodka in Russia will lead in terms of both capacity and capex. This announced cracking-type refinery will have a capacity of 241 mbd in 2022 with estimated capex of 5.6 billion, expected to be spent between 2018 and 2022. Amur in Russia and Jizzakh in Uzbekistan, are the next two top refineries with capacities of 120 mbd and 100 mbd respectively.
With reference to capex, after Nakhodka, Supsa in Georgia leads with capex of $3.7 billion during the period 2018 to 2022, followed by Chechnya in Russia with capex of US$2.8 billion.