Kirishi Chosen for New Oil Refinery
‘The most recent Russian oil refinery was built in the Soviet Union about 35 years ago.’
Published: March 26, 2014 (Issue # 1803)
The first new high-conversion residual oil refinery in Russia is due to begin construction in the town of Kirishi, located 150 kilometers southeast of St. Petersburg. Six years in preparation, the Russian Ministry of Energy has granted its approval of the project and the refinery is currently in the design and engineering phase. The first stage of the plant is due to come online sometime in 2017 or 2018 at a capacity of 4 million tons per year, with a subsequent boost to 12 million tons per year.
“The most recent Russian oil refinery was built in the Soviet Union about 35 years ago,” said Maxim Sushkevich, the executive director of the Kirishi-2 Oil Refinery, speaking to The St. Petersburg Times. “After this, only small oil refineries with a capacity of up to one million tons per year were developed. Most other oil refineries are existing plants that have been modernized. The uniqueness of our project is that we are engineering the refinery from the ground up.”
The average rate of residual oil conversion in Russia is 71 percent, according to data from the Kirishi-2 Oil Refinery. Residual oil is oil found in low concentrations naturally or in exhausted oil fields. The figure represents the amount of useful products extracted from the oil, such as petrol or diesel fuel. The remaining 29 percent is made up of mazut, a heavy, low-quality waste oil. The new plant expects to increase the conversion figure to 95 – 97 percent. The refinery is being constructed specifically with this aim in mind.
“Mazut was used in the past for heating. With the move to gas, the demand in mazut is falling in Russia,” said Sushkevich.
“In the past, western oil factories bought mazut as raw material and reprocessed it. From 2015, the taxes on mazut will be equal to those levied on oil. It will become unprofitable to export, as western consumers will not pay the same price for it as they do for oil. If given a choice between buying a good-quality oil or a residual oil, I think the choice is obvious. So there will be a lot of mazut flooding the domestic market,” he said.
It is the domestic market, with its lack of quality fuel, that is the target for the new refinery. The company plans to produce AI-95 petrol, diesel, kerosene and petrochemicals. Yet the company does not discount the possibility of selling the remaining product abroad.
The representatives of Kirishi-2 say that the location of the refinery is suitable, due to prevailing winds. None of the emissions from the factory will affect either Kirishi or St. Petersburg.
It was for this reason that the location was chosen by Soviet authorities for the KINEF refinery, which is often referred to as the Kirishi refinery. The new facility, however, is not related to the old biochemical plant but is a separate entity. The owners of the new plant intend to use the extant infrastructure that is already available on the site, including railway lines and highways that will be used to transport both raw materials and finished products.
“Kirishi-2 will utilize the latest technologies to ensure that the plant is ecologically friendly,” said Sushkevich. “The environment is our priority. Although these technologies will slightly boost our costs, we will recoup our expenses in the end. It is always best to minimize risk, including to our reputation, beforehand. Our goal is for the refinery to wholly service the community, by providing jobs and further stimulating the petrochemicals industry regionally and nationally.”
The refinery’s management estimates that the investment in the first stage of construction will be $6 billion. This will be made up of money from individuals and some private foundations. The Ministry of Energy also runs a program that offers funding for such enterprises, which Kirishi-2 has applied to join.