Russia's Surgut to Export Baltic Diesel

Posted by Joseph Keefe May 14, 2014

Surgut to transport diesel by rail from its Kirishi refinery; Main diesel terminal in Primorsk reaches full capacity.

Surgutneftegas will start exporting diesel from the Baltic port of Ust Luga next month after extensive modernising upgrades to Russian refineries have created a surplus of higher grade fuels, traders said.

Russian refiners are struggling to find new ports to cope, with the Baltic's Primorsk already at full capacity.

Surgut, Russia's third-largest oil producer, plans to transport diesel by rail from its 420,000 barrels-per-day (bpd) Kirishi refinery in northwest Russia to Ust Luga.

From there it will be exported from the Sibur-Portenergo terminal owned by Sibur, Russia's top petrochemical company, the trading sources said.

Initial exports were expected to total around 60,000 tonnes of diesel per month, or roughly two cargoes. Most Russian diesel exports from the Baltic Sea go to Europe.

Europe's refineries have been hammered over the past year by growing imports of cheap and high quality diesel from Russia and the United States. Any further increase in imports will put even more pressure on refining margins in the region.

Acording to the sources, Sibur plans to expand the capacity of its terminal, used so far for exports of naphtha and liquid petroleum gas (LPG).

Surgut and Sibur declined to comment.

Diesel exports from the main Baltic terminal of Primorsk have reached the maximum capacity of nearly 1 million tonnes per month.

Traders have said Primorsk will export 10.16 million tonnes of diesel this year, up 26 percent from 2013

Russia's oil pipeline monopoly Transneft said in March it plans to boost diesel exports from the Baltic Sea port of Primorsk after 2016 to around 23 million tonnes a year.

Transneft is also planned to complete by the end of 2014 the construction of a pipeline from the Kirishi refinery to Primorsk.

Last December, Surgut launched a 98,000 bpd hydrocracker complex at the Kirishi refinery to allow it to increase production of high-grade, ultra low sulphur diesel.