Refining investment in Russia and its backyard are thrusting that country into the role of Atlantic basin gasoline exporter, according to ESAI Energy’s newly published CIS Watch Products Outlook. Between Russia’s higher gasoline production and disappearing export opportunities in its own backyard, Russia will increase its gasoline exports to Europe and Atlantic basin markets by 75,000 b/d. Due to this shift, Russian and European refiners will compete more than ever in the gasoline market.
The report details gasoline and other units being commissioned in both Russia and neighboring countries. Russia’s tax structure incentivizes this investment by rewarding refineries for producing gasoline instead of naphtha and clean products instead of fuel oil. In response, in the next month or so the Taneco and Antipino refineries will both start producing gasoline and cutting naphtha yields. On Russia’s southern rim, Kazakhstan’s three main refineries are simultaneously completing FCC and other projects that will enable the country to eliminate its 20,000 b/d of Russian gasoline imports. Albeit in a different time frame, developments in other neighboring countries like Azerbaijan and Ukraine will also push more Russian gasoline into the Atlantic basin.
“Russia’s growing gasoline exports will be just one more step in the longer-term transformation of its refining sector’s role in international refined product markets,” explains ESAI Energy Principal Andrew Reed. “Russia is emerging as a dynamic player in clean product markets, much more than just a diesel exporter. They are replacing their traditional exports of fuel oil and VGO with a more dynamic slate of clean products. Traditionally, the inflow of Russian distillate to Europe has posed a competitive threat to European refiners. Going forward, competition in gasoline export markets represents another growing threat to European refiners.”
ESAI Energy, LLC