Tax maneuver changed the economy of oil refineries: margins decreased from 6.3% in 2014 to 1.8% in 2015, writes Vygon Consulting. In Russia, at the beginning of 2016, Nelson Index, an indicator of quality of oil refining, exceeded 8 (average for Europe) only for two refineries, and the average was 5.26. Margin of an average Russian refinery in Europe would be negative or close to zero, writes Vygon Consulting.
Rosneft is considering selling four refineries, an official and employee of the oil company told Vedomosti. Four refineries of Rosneft can be either closed or sold, confirms Reuters, citing two knowledgeable sources.
Rosneft is considering the possibility to sell the Kuibyshev, Novokuibyshevsk, Syzran (Samara refineries group) and Saratov refineries, says the source of Vedomosti. Reuters sources said that the fate of Syzran and Kuibyshev refineries, as well as the Angarsk Petrochemical Company (APCC), is being discussed. Rosneft is considering selling Angarsk, confirmed by an official familiar with the plans of Rosneft. APCC is now working at a loss, noted the source of Vedomosti in Rosneft group.
The price of the Samara group of refineries is about $ 2 billion, according to an investment strategist at BCS Maxim Shein. Another $700 million can be gained for APCC. But the depth of processing in plants is low, buyers still have to invest in modernization, he warns.
Price of the modernization
In the last seven years Rosneft has invested 268 billion rubles in the Saratov refinery, Angarsk, and the Samara group of refineries. 75 billion were spent on Kuibyshev and Novokuibyshevsk refinery each, APCC received 56 billion rubles, as follows from Rosneft reports. Of the 8.8 million tons of petroleum products in 2015, the Novokuibyshevsk refinery produced 2.26 million tons of fuel oil, Kuibyshev from 6.8 million tons gave 2.24 million tons, Angarsk gave 2.14 million tons of fuel oil.
Rus-Oil has not received any proposals from Rosneft, said a representative of the former company. Representatives of Gazprom oil and Antipinsky refinery declined to comment, a representative of Lukoil has not responded to the request.
We do not see anything to be commented, "as the story was originally invented for unknown purposes," said a representative of Rosneft. The company has not yet decided whether to sell the refinery, says the counterparty of Rosneft, but does not say what options the company has still there.
Rosneft has 11 major refineries in Russia, their production capacity in view of mini-refineries is 108.5 million tons per year. In 2015, they worked under 78.1% load. During January - September 2016 (more recent data are not available) they processed 60.4 million tons of oil, received 58.92 million tonnes of petroleum products, of which 18.8 million tons of diesel fuel, and 16.03 million tons of fuel oil. From the sale of petroleum products in the first three quarters of last year, Rosneft received 44.6% of total revenue, or 1.6 trillion rubles.
With the purchase of 50.08% of Bashneft, the Rosneft chain of production included Bashneft-Ufaneftekhim, Bashneft-Ufa Oil Refinery, Bashneft-Novoil. In the first nine months of 2016 they processed 13.6 million tons of oil, making 12.5 million tons of oil (5.3 million tons of diesel fuel and 1.7 million tonnes of fuel oil). From the sale of petroleum products, the company received 67% of revenue, or 292.5 billion rubles.
Before the tax maneuver, even in 2014 Bashneft received from the petroleum 73% of its revenue, while Rosneft had 45.4%, or 471 billion and 2.1 trillion rubles, respectively.
The fall of refinery margins due to the tax maneuver and cheap oil makes Rosneft to delay their modernization, reported Reuters. During January - September 2016 capital expenditures on the modernization of the Russian refineries o Rosneft fell by more than 2 times compared to the same period of 2015 and amounted to 34 billion rubles, the company said in the statement.. For comparison: in January-September 2016, Bashneft ncreased investments in processing and commerce by 44.5%, they reached 11.5 billion rubles.
Samara group of refineries of Rosneft is the legacy of Yukos; at current prices for oil and oil products, they are most likely working on the verge of profitability or even loss-making, says a familiar of top-managers of Rosneft. Nelson index at these plants ranges from 2 to 4, while at Bashneft refineries it is 9.1. It is possible that after conservation of the Samara plants or their sale, the company will send additional amounts to the Bashneft refineries.
Apparently, Rosneft is not ready to continue to invest in the development of deep processing and considering different options for the refineries, which produce a lot of oil, says analyst Andrey Polishchuk at Raiffeinsenbank. Since this year, the rate on the export of fuel oil will be 100%; for the first three quarters Rosneft received 7.5% of total revenue, or 258 billion rubles, from export of fuel oil to non-CIS countries. The company may begin to quit the production with a low level of processing, said Polishchuk.