International Oil Refining Projects. Promising International Projects
International Oil Refining Projects
The Company indirectly owns a 21% stake in JSC Mozyr Refinery (Belarus) through PJSC NGK Slavneft. In 2018, the Mozyr Refinery’s share in Rosneft’s refining throughput totaled 2.1 mmt, including 0.2 mmt from tolling arrangements under a processing agreement. During the year, the Company supplied a total of 5.1 mmt of oil to this refinery. The Company is continuing its investment project for the construction of a heavy residue hydrocracking unit, scheduled to be launched in 2019.
Promising International Projects
In order to expand its presence in the growing high-marginal markets, Rosneft is implementing a number of promising oil refining and petrochemistry projects in Indonesia and China.
Oil Refinery and Petrochemical Complex Construction Project in Tuban
To implement the project for the construction of an oil refining and petrochemical complex in Tuban in the East Java Province (the island of Java, Indonesia), in May 2016, Rosneft and the Indonesian PT Pertamina (Persero) company signed a framework cooperation agreement, and in October 2016 – an agreement on a joint venture.
On 28 November 2017, the PT Pertamina Rosneft Pengolahan dan Petrokimia joint venture was established (Rosneft - 45%, Pertamina - 55%).
In 2018, procedures for selecting engineering processes licensors, Basic Engineering Design and FEED contractors, and a Project Management Consultant were undertaken.
The crude oil distillation capacity of oil refineries will be about 15 mmtpa. Feedstock comprises imported medium and heavy sour crude oils. The project envisages the construction of a large fuel oil catalytic cracking unit and a petrochemical complex with an ethylene capacity of over 1 mmtpa. Plans are underway to produce motor fuels, aromatic hydrocarbons, various grades of polyethylene, polypropylene, and monomers.
Chinese-Russian Eastern Petrochemical Company, Tianjin (Vostok Petrochemicals Joint Venture)
The following parties are the members of the joint venture for the construction and operation of the Tianjin refinery/petrochemicals complex:
- Rosneft – 49%;
- China National Petroleum Corporation (CNPC) – 51%.
The planned capacity of the Tianjin refinery is 16 mmtpa.
In May 2016, the Board of Directors of JV Vostok Petrochemicals approved the process configuration of a refinery and aromatic hydrocarbon complex. Currently, the parties continue to discuss the parameters of the project.
The project will ensure the Company’s access to the wholesale, small-scale wholesale, and retail markets of China’s petroleum products, as well as to the rapidly growing and under-served market of petrochemical products in China and regional countries.
Nayara Energy Limited
In August 2017, Rosneft closed a deal to acquire a 49.13% stake in the Indian Essar Oil Limited. On May 25, 2018, by a decision of the shareholders, Essar Oil Limited was renamed as Nayara Energy Limited.
Rosneft acquired a stake in one of the most advanced Asian-Pacific oil refineries in Vadinar, with an annual crude throughput of approximately 20 mmt. While the EOL Refinery in Vadinar is the India’s second largest by throughput, it is also among the world’s top ten refineries in terms of technology and process sophistication, with a Nelson Index of 11.8. The highly flexible Vadinar refinery can use both heavy and extra-heavy crudes, accounting for over 90% of its annual throughput, and has achieved the highest operational efficiency for its assets: 17 of its 28 Solomon benchmarks are in the top 1st quartile.
Vadinar Refinery has access to its own deep-water port, which can accommodate VLCC supertankers, and also excessively covers the demand for electricity by its own power plants.
The Nayara Energy Limited’s business includes a vast network of over 5 thousand filling stations operating under the Essar brand across India.
In 2018, the shareholders approved the start of basic design activities under the first phase of Vadinar Refinery development program, involving the renovation of catalytic cracking unit, organization of the petrochemicals production, entry into Indian petrochemicals market, and production of high-octane components for motor gasoline.
Rosneft Deutschland GmbH (RDG)
The company entered the German refined products market in 2011 with the acquisition of 50% of JV Ruhr Oel GmbH (ROG). Following the restructuring of ROG, which ended at the end of 2016, Rosneft gained direct control over more than 12% of the refining facilities in Germany with a total annual refining throughput of about 12.5 mmt. Rosneft became a shareholder and doubled its stake in the Bayernoil refinery to 25% (from 12. 5%), in the MiRO refinery to 24% (from 12%), and in the PCK Refinery (Schwedt) refinery to 54.17% (from 35.42%). In turn, BP Plc (BP) consolidated a 100% stake in the Gelsenkirchen Refinery.
Rosneft became the third largest oil refiner in the German market and has been operating since 2017 as part of a new subsidiary, Rosneft Deutschland GmbH. Rosneft annually covers about a quarter of German crude oil imports - about 23 mmtpa.
Following up upon the agreement on restructuring the joint venture, Rosneft and BP agreed on gradual changes in the chain of petroleum products sales in order to ensure the timely execution of contracts with refineries’ customers during the transition stage. This period was completed as planned.
On 1 January 2019, Rosneft Deutschland GmbH went ahead with direct sales of petroleum products. The company sells all petroleum products produced by Rosneft Deutschland GmbH at three German refineries with Rosneft’s shareholding, including gasoline, diesel, heating gas oil, jet fuel, liquefied petroleum gases (LPG), bitumen, fuel oil, and petrochemicals. The company is the leading wholesale supplier of petroleum products in the German market
and supplies oil products directly from the refineries and from over 30 shipping terminals in Germany by road, rail, and river. The company’s customer base comprises more than 500 enterprises in Germany, Poland, the Czech Republic, Switzerland, Austria, and France.
The successful start of full-scale marketing of products was also contributed by the company’s experience in selling bitumen in 2018. During this period, Rosneft Deutschland GmbH delivered products to over 130 German companies.
As part of a strategy to create its own marketing area, Rosneft Deutschland GmbH introduced the new generation information system SAP S/4 HANA. In terms of data size, this project has become the largest in the European oil and gas industry and one of the largest in the world, with the software being a cutting-edge development for enterprise resource planning.