Project

Kirishi-2 Oil Refinery: Russia’s first residual oil high conversion refinery

The project to build the Kirishi-2 Oil Refinery – Russia’s first residual oil high conversion refinery – is developing at a rapid pace. Approval for the refinery has already been secured from the Russian Energy Ministry and international and domestic investors are actively engaged in negotiations to participate in this compelling energy initiative.

Boasting a high yield of light oil and high-quality engine fuel, the Kirishi-2 Oil Refinery will have an annual hydrocarbon rude processing capacity of 4 million tons upon launch, with a subsequent boost to 10 million tons. A highly profitable project, the refinery will play a significant role in Russia’s oil and petrochemicals market in the 21st century; indeed, the necessity to develop this project is dictated by numerous overarching factors.

In 2012, Russia allocated 266 million tons of oil for processing. However, as of 2015, experts anticipate that this figure will drop to 262 million tons, while the number will further shrink to 230 million tons by 2020. This trend is due to Russia’s customs duty policies, which aim to unify dirty and light petrochemicals rates at the level of 66% of oil duties and to introduce a prohibitive tariff on gasoline, as oil duties drop to 40%.

This change in duties is aimed at stimulating oil refining efficiency in Russia, supplying the domestic market with gasoline, and increasing oil production and exports, which are far more profitable for Russia than petroleum product exports. As the volume of refined oil declines, experts envisage a sharp increase in the oil processing depth. At the same time, cleansing oil in plants without secondary processes will become unjustified economically, thus resulting in a drop in processing volumes at these enterprises.

The first residual oil high conversion refinery in Russia, the Kirishi-2 Oil Refinery is a remarkable project for a bevy of reasons. Offering a high yield of light oil (73.12 percent) and high-quality motor fuels, the facility will mainly produce AI-95 motor gasoline, gas petrochemicals, diesel, kerosene, LPG appliances, isobutene, N-butane, petroleum coke, propane, and sulphur. Located on the premises of a biochemical plant near the KINEF refinery, the Kirishi-2 Oil Refinery will benefit from the advantages offered by existing infrastructure, such as railway lines and motorways that will be used to transport raw materials and finished products, in addition to an abundance of highly skilled technical personnel, who will require only short-term training.

The Kirishi-2 Oil Refinery will further benefit from its location in the Northwestern Federal District, as the region is a major petrochemicals consumer. Positioned near existing crude oil export flows and a pumping station, the refinery’s processing capacity will expand readily, as additional transportation costs will not be incurred. Undoubtedly, the timing for the project could not be more advantageous as the Northwestern Federal District begins to witness the unprecedented development of its fuel market in light of the Baltic Pipeline System, the Timan-Pechora oil and gas province, the Shtokman gas condensate field, and the growing petrochemicals retail trade in St. Petersburg. On this backdrop, the recently reduced rates on exports by rail to Russian ports have made transporting petrochemicals to St. Petersburg a far more attractive option than exporting to Baltic ports.

A remarkable facility for Russia and the international energy community, the Kirishi-2 Oil Refinery will also use modern engineering units and supporting machinery to minimize the emission intensity of potential sources of pollution. From an environmental position, a major advantage of this facility is that the refinery will dramatically reduce the emissions resulting from the combustion of petroleum products by end users.

For detailed information about the Kirishi-2 Oil Refinery, please contact our press and investor relations team. We look forward to discussing our shared prospective cooperation and future successes in global refining. 

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