Vice President of Transneft Sergey Andronov, Deputy Vice President – Director of the Petroleum Products Transportation, Metering and Quality Department of Transneft Vladimir Nazarov, Deputy Vice President – Director of Commodity Flows Metering and Planning Department at the Company Igor Katsal, as well as Director General of Transneft Baltic Yury Bogatenkov and Director General of Transneft Primorsk Port Maksim Kudinov answered the questions of journalists during a press tour to Transneft Baltic’s facilities and visits to the ports of Ust-Luga and Primorsk.
Oil and petroleum products transshipment in Port Ust-Luga
It is planned that crude oil transshipment in the port Ust-Luga will reach the level of 30 million tonnes in 2018, compared to 32.7 million tonnes in 2017. Vice President Sergey Andronov explained that the reduced transshipment volumes were caused by redirection of flows from the western to the eastern direction in view of the intergovernmental agreement with China.
Director General of Transneft Baltic Yury Bogatenkov clarified that at the present moment routing orders had been agreed upon for 28.5 million tonnes.
Oil and petroleum products export via the port of Primorsk
Pictured: the port of Primorsk
In 2018, the port of Primorsk planned to transship 34 million tonnes of oil and 18.3 million tonnes of petroleum products for export, Director General of Transneft Port Primorsk Maksim Kudinov said to the journalists.
In 2017, transshipment volumes amounted to 44 million tonnes and 15.9 million tonnes, respectively. In 2019 the plan calls for the export of 31 million tonnes of oil and 19.8 million tonnes of petroleum products; in 2020 – 31 million tonnes and 23.9 million tonnes, accordingly.
Rosneft accounts for the highest share of crude export – 43.57%, followed by LUKOIL (28.96%), Surgutneftegaz (18.39%) and Tatneft (9%). Here is the breakdown by destinations: the Netherlands – 59.79%, Finland – 15%, Lithuania – 5.22%, Germany – 3.4%.
A for petroleum products, the biggest export volumes fall to the share of Surgutneftegaz (36.8%), followed by LUKOIL (11.4%), Rosneft (10.9%), TAIF-NK (10.7%), Antipinsky Refinery (10.6%), Gazprom neft (10%) and Bashneft (10%). As for destinations, the Netherlands also takes the lead (38.1%), followed by Germany (19%), UK (15.1%) and France (11.3%).
Mr. Kudinov also informed that the program of investments for 2018 neared RUB 4 billion (RUB 5 billion in 2017).
He added that in the second quarter they planned to start repair works at the first berth where the dismantling of the structures earlier damaged by the Delta Pioneer tanker during its mooring would soon be over. The repair works will be completed in the fourth quarter.
Mr. Andronov also informed that Transneft was close to an amicable settlement with defendants on the case of the Greek tanker that damaged the berth in Primorsk, but did not disclose the terms of the amicable settlement.
Oil receipt to the Transneft system
The volume of oil fed to the Transneft system for 2 months of 2018 went down by 1.5 million tonnes year-on-year, according to Mr. Andronov.
“In January, 40 million tonnes were fed, and in February we expect 36.2 million tonnes,” he specified.
Deputy Vice President – Director of Commodity Flows Metering and Planning Department at the Company Igor Katsal explained that in January the reduction would come to 900 thousand tonnes, in February – to 600 thousand tonnes. “The reduction rates of crude delivery to the system are comparable to those of last year – the total volume sank by 1.5 million tonnes during 2 months, year-on-year,” he said.
Mr. Andronov clarified that the reduction was caused primarily by the fact that Russia was true to its commitments within the OPEC+ programme.
The progress of the Sever-25 project
The project to increase the capacity of the Sever petroleum products pipeline to 25 million tonnes a year would be fully completed in Q1 2018, Vice President of Transneft Vladimir Nazarov said.
“In 2020, we actually expect the resource base to increase to 24.5 million tonnes; in 2019 – to 20 million tonnes. Talking about the planned capacity, all works on the Sever-25 will be completed in the first quarter, and starting in the second quarter we’ll be able to transport up to 15 million tonnes a year,” he said
According to Mr. Nazarov, Tatarstan’s refineries TAIF and TANECO ought to be connected to the pipeline. A trilateral agreement was signed between Transneft and the said refineries, whereby the Company shall receive up to 3 million tonnes of commodity a year from TANECO and up to 3.2 million tonnes a year – from TAIF. For its part, Transneft has taken all the necessary measures and hopes the refineries will get hooked up to the Sever-25 in 2018.
The progress of the Yug project
Mr. Nazarov also shared the information that Transneft would commission the petroleum products pipeline of the Yug project after the system was tested under maximum loads.
“This will depend, among other things, on weather conditions in Novorossiysk. We could not ensure the full volume of pumping in January because of the stormy weather. Only when we pass all tests under maximum loads using essential additives and other technical measures, then we can be more positive” he pointed out.
At present, the petroleum products pipeline operates in the pilot run mode with the average amount of products fed to the system standing at 330 thousand tonnes per month. “By the year’s end, we may increase the volumes delivered to 4 million tonnes,” Mr. Nazarov specified.
Petroleum products transportation tariffs
Starting on 1 March 2018, Transneft will increase its tariffs for petroleum products transportation over the system by 4.8% on average, said Mr. Nazarov. “At least 10 days prior to the introduction of new tariffs we must have notified FAS and we did that, sending them a notice that starting on 1 March 2018 the tariffs would be indexed by 4.8% for the entire system,” he said.
Mr. Nazarov pointed out that Transneft did not index its tariffs wherever Russian Railways introduced discounts. “This is the maximum possible indexation,” he added.
Measures of maintaining crude oil quality in the system
Pictured: tank farm in the port of Primorsk
Transneft would spend RUB 5 billion in 2018 to maintain the quality of crude oil exported from Russia over pipelines, said Deputy Vice President Igor Katsal.
“We’ll allocate about RUB 5 billion for these activities in 2018. The entire technical upgrading programme pursues stabilization of the crude oil quality that flows over our pipelines in 2017-2022. We plan to install quality blocks, crude oil real-time metering systems and create 20 new blending stations – this will cost us some RUB 30 billion during 5 years,” he said.
Mr. Katsal informed that in 2018 the plan called for implementation of three groups of measures to keep the sulfur content in crude oil at the standard level: building a blending station for crude with various sulfur contents in Samara, a set of measures in Yaroslavl for redirection of the northern crude from Komi and Russian refineries for export and for Naftan as well as the launching of a new small but important pipeline near Nizhnevartovsk.
The completion of construction on the Nizhnevartovsk – Aleksandrovskoye crossover oil pipeline is expected in November 2018. Its planned capacity is 18 million tonnes a year. “This will actually enable us to change the low-sulfur flow for the high-sulfur flow inside the system, directing the high-sulfur crude in the eastern direction and retaining the low-sulfur crude for the western commodity flows where we are now facing the main quality problems in the system,” Mr. Katsal explained.
“This will allow us to insignificantly stabilize the quality on all western routes, but the quality won’t be much better, in the final analysis, as the market may expect,” he added.
Mr. Katsal stressed the fact that the sulfur content would remain at the level of 0.5% at the ESPO pipeline end in Mohe and Kozmino, whence crude is further delivered to China. “After the Nizhnevartovsk – Aleksandrovskaya crossover oil pipeline reaches the full capacity of 15-16 million tonnes of crude per year, we’ll insignificantly degrade the ESPO oil quality, but on the whole, the sulfur content won’t exceed 0.6% downstream on the export routes to Mohe and Kozmino,” he explained.
According to his information, the entire technical upgrading programme for stabilization of the crude quality in the commodity flows in 2017-2022 is estimated at about RUB 30 billion.
Mr. Katsal also said that Transneft asks the Russian Energy Ministry to enter changes to the effective scheme of standard technological commodity flows for four export routes: increase the upper admissible limit of the sulfur content in the flow to 1.65% for Primorsk (now standing at 1.57%), to 1.55% for Novorossiysk (now standing at 1.49% and 0.56% for Siberian Light), to 1.8% for Druzhba and Ust-Luga (now 1.71%).
According to Transneft forecasts, even if the amount of low-sulfur crude fed to the system keeps growing, it will be in demand in the East all the same. In the West less and less high-sulfur crude is fed to the system, but it still exists there. “Whereas in 2014-2015, the accrual of high-sulfur oil which is added to all western commodity flows stood roughly at 3 million tonnes a year, in 2017 the volume of low-grade oil additions fell down to 1 million tonnes, but they still exist so high-sulfur crude will be affecting all western commodity flows in the future as well. Therefore, the proposal to set apart the Heavy Urals oil grade is strategic for 10 years ahead. It can be unpopular, but this measure would help preserving the Urals grade quality on all western routes,” Mr. Katsal pointed out.
Kashagan oil delivery via Russia
Transneft expects that in 2018 about 1 million tonnes of crude will be pumped from Kashagan (Kazakhstan) over the oil pipeline Atyrau – Samara – Novorossiysk, said Vice President Andronov.
He added that the requests from Turkmen producers for oil transportation via Russia in the direction of Novorossiysk stood at the level of 120 thou tonnes. “The Turkmen oil delivery logistics depend on which of the companies wins the tenders and acquires the given crude. To the best of our knowledge, SOCAR is the winner of tenders for the crude of Turkmen producers and this Company transports oil in the direction of Baku – Tbilisi – Ceyhan,” Andronov explained.
Oil deliveries to Belarus
Answering journalists’ questions, Mr. Andronov informed that in 2018 Transneft would deliver 18 million tonnes of crude to Belarus.
Transneft transports crude oil for export in accordance with the schedules approved by the Energy Ministry. In 2018, the planned supply is 18 million tonnes.
Diesel pumped in the direction of Ukraine
Mr. Nazarov also informed that this year Transneft planned to increase diesel deliveries to Ukraine.
“Last year, we delivered 2 million tonnes of diesel fuel to Ukraine and this year we expect deliveries to remain at a similar level,” Deputy Vice President – Director of the Petroleum Products Transportation, Metering and Quality Department of Transneft said.
“Speaking about transit, last year transit via Ukraine in the direction of Hungary amounted to 500 thousand tonnes and this year we expect 1 million tonnes,” he added.
“In other words, a total of 2.5 million tonnes were transported via Ukraine last year, whereas this year we anticipate transit at the level of 3.2 million tonnes,” clarified Mr. Nazarov.