Rosneft preferred to trade crude oil

The company Igor Sechin shifted the modernization of the refinery from 2020 to 2027.
Rosneft, which in recent years has reduced investments in refineries, has shifted the completion of the modernization program for its plants from 2020 to 2027. Other major oil companies - LUKOIL, Gazprom Neft, Gazprom and Surgutneftegaz - practically fulfilled the plan. Investments are falling because of the uncertainty of the tax regime and low profitability, according to the Energy Ministry. Experts call the shift in the timing of modernization a natural, because now it is more profitable to export oil, and not invest in processing.

Rosneft has so far only half fulfilled its obligations to modernize the refinery within the framework of the quadripartite agreements between the government and oil companies concluded in 2011. So, by 2020, Rosneft (owns 13 large refineries, 36% in primary oil refining in Russia) had to build 42 plants at its plants, but so far only 20 have built, and two have refused. The remaining 20 installations the company now expects to build in the period until 2027, follows from the April presentation of the Ministry of Energy (there is a "b").

"Information about the postponement of the company's refinery modernization program for up to seven years is untrue. Rosneft implements the modernization program in accordance with the approved business plan and schedule of work, "Rosneft told Kommersant. When asked if when the modernization plan is completed, the company was not answered.

Gazprom Neft (two refineries in Russia) will complete the modernization in 2018, follows from the presentation, built eight of the nine installations (the company wanted to build ten, but refused to install one). LUKOIL (four oil refineries) has also practically fulfilled the declared program - 10 out of 11 units have been built, but the company decided not to build four units.

In 2011-2027, 128 secondary facilities are planned to be commissioned, of which, as of May 2018, 78 units have been commissioned, the Ministry of Energy told Kommersant.

"Due to the changed macroeconomic, price and tax conditions, the pace of investment in modernization has slowed down," the agency confirmed to the agency, adding that the industry does not have "an understanding of the long-term tax and customs regulation system," and the return on investment is low. At the same time, the government discusses measures to support the refinery, the ministry added. As the basic variant, the reverse excise tax is discussed (see "Kommersant" on January 30). Among oil refineries of large oil companies, according to the Ministry of Energy, TANECO Tatneft (86.1%), Volgograd Refinery LUKOIL (75.8%), Omsk Refinery Gazprom Neft (72.6%) are leading. The best figure among the refineries of the Ufa Group (65.1%) owned by Bashneft (in 2016, its controlling stake was bought by Rosneft) and the Komsomolsk refinery (64%) is the best figure among Rosneft's refineries. The average depth of processing in the RF is 62%.

Four-party agreements were concluded in 2011 by the FAS, oil companies, Rostekhnadzor and Rosstandart. The oil companies took upon themselves the obligations to modernize the refinery and the volumes of oil products supplied to the domestic market. The head of the FAS FAS department Dmitry Makhonin told Kommersant that the service "extremely negatively" refers to the non-fulfillment of the quadrilateral agreements and "recently a number of companies sent reminders about the need to ship 20% of the produced light oil products to the domestic market." Later, the FAS reported that such a warning was issued to Rosneft. In Rostekhnadzor did not give a comment.

"Rosneft" reduces investments in modernization of the refinery for several years - from 195 billion rubles. in 2013 to 65 billion rubles. in 2016 and in 2017. According to Vasily Tanurkov of ACRA, another 400 billion rubles may be required to complete the modernization of Rosneft. As reported by "Kommersant" in early March, the head of Rosneft Igor Sechin asked Vladimir Putin to support the company's refineries from the budget of 145 billion rubles. Last week, Mr. Sechin said that EBITDA of Rosneft's plants in "today's macro conditions" does not exceed 7% of the company's EBITDA, which is "an insignificant figure" when investing more than 1 trillion rubles.

Modernization of the refinery now has very limited impact on the price of fuel - the last time a serious impact on prices was observed during the gasoline crisis of 2011, now there is no such influence, as the demand for gasoline in the Russian Federation is stagnating, Mikhail Turukalov of the Analyst of Commodity Markets believes. In his view, the postponement of the modernization of the refinery by Rosneft is a justified step, since it is more profitable to export oil under current tax conditions. In addition, the last nine months of the price of petroleum products in the domestic market are kept below export parity, he notes, because of this, oil companies are losing revenue.