EMEA News
Russian Refinery Upgrades will "Starve" Europe of Heavy Fuel Oil
A $55 billion overhaul of Russia's refineries will "starve" Europe of heavy fuel oil (HFO) and flood it with diesel, according to a report by Reuters.
The investment in the nation's refineries, some of which date to the 1940s, will improve efficiency, producing more of the lighter and more valuable petroleum products, including diesel.
That will mean both more competition and less feedstock for European refineries.
The Russian upgrade includes the installation of 130 new units, such as a 60,000-barrel-per-day (bpd) hydrocracker at Surgut's Kirishi refinery.
At the same time, Russia plans to triple crude exports to China, further reducing the amount of oil available to European refiners.
"European refineries are going to be hit across the board," said Heitham Tolba, an analyst for energy consultants Wood Mackenzie.
Russia, which exports about 3.5 million bpd of crude oil to Europe, plans to increase secondary refining, "cracking" hydrocarbons into simpler forms, by 90 percent by 2020.
Most of the surplus diesel would be exported to Europe.
In October, Russian energy company GroupTranzit DV Co. Ltd. called for a ban on the use of straight-run fuel oil as bunker fuel, urging that it be used for the production of more expensive cracked oil product instead.
