Only in Ukraine Nothing is Changing

lighted brown concrete buildings at night

Refineries modernization activities are also in progress in the Commonwealth countries. For example, Hyundai Engineering Co of Korea is upgrading the oil refinery in West Turkmenistan, having put into service USD 534 million worth of equipment. Refinery rehabilitation in Turkmenbashi on the Caspian Sea Coast started in May 2012 and shall be completed by 2015. This plant is one of the two oil refineries in Turkmenistan. They process the main volume of annual oil production – 10-11 million tons – in the country which is more famous as the region’s largest natural gas supplier. Annual capacity of the refinery in Turkmenbashi is about six million tons. Earlier, the government of this country had shared ambitious plans to build three new oil refineries by 2030 with an eye to growth of oil production up to 67 million tons per annum.

The Uzbek government will assign USD 205 million to modernization of Fergana Refinery by 2016. As reported by the Uzbek mass media, it is planned to modernize the plant to produce petroleum products of Euro-3 standard and higher. In the next five years, another intention is to execute the oil cuts hydroskimming project worth USD 99 million. Project implementation will allow refining of 500 thousand tons of petroleum oil cuts annually. It is also reported that the projects will be financed at the expense of UzbekNeftegaz petrochemical company and using the credits of Uzbekistan Reconstruction and Development Fund.

As you may recall, there are three operating refineries in Uzbekistan – Bukhara, Fergana and Altyaryk – with a total refining capacity of 11.12 million tons. Currently, these capacities are loaded on 60%. As was previously reported, Uzbekistan will invest USD 75 million in modernization of Bukhara Refinery in 2012-2014.

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In Kazakhstan, state company KazMunayGas is nowadays controlling all three refineries operating on the territory of this country. As of today, process modernization programs are ongoing in full swing at Atyrau, Pavlodar and Shymkent oil refineries. As a result of current activities involving major globally renowned engineering companies, KMG is intending to obtain state-of-the-art enterprises capable of producing raw stock for the petrochemical industry development. Annual processing capacities of three refineries will increase to 21 million tons by 2022 from 11.4 million tons in 2011. Processing intensity will rise to 90%. Motor fuel quality will conform to Euro-4 and 5 standards. Besides, it is contemplated to build another refinery in the period after 2019-2020.

Furthermore, Kazakhstan authorities admit that they proceeded to implementation of refineries modernization project with delay, whereas expansion of the subject capacities could have reduced the price fluctuation and deficiency of fuels and lubricants in the domestic market today.

Ahead of the curve are our neighbors from Belarus. The Belarus refineries propose to the government of the republic to switch the domestic fuel market to Euro-5 standards already this year as they are fully ready to provide it with high-quality fuel. Just so, Mozyr Refinery switched to production of Euro-5 diesel fuel after the hydrotreatment unit became operational at the end of 2011, and Euro-5 gasoline in early 2011. Starting from 2012, Mozyr Refinery has been providing European class gasoline A-95 to the entire Belarus market. Novopolotsk Refinery also mastered production of Euro-5 diesel fuel and gasoline.

As for way forward, Mozyr Refinery is planning to complete construction of the heavy oil residue hydrocracking unit in 2017 and put it into operation.

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“We have managed to arrange funding of reactor fabrication by Marubeni (Japan) for the heavy oil residue hydrocracking unit (H-oil). According to our estimates, construction of this unit shall be finished in 2017,” informed Anatoly Kupriyanov, Mozyr Refinery General Director.

Upon putting this unit into service, Mozyr Refinery will jump to a new technology level and will become the most high-tech refining works in CIS. The enterprise is currently completing construction of the isomerization unit and will cease production of A-80 gasoline as soon as it is started up. Considering future launch of isomerization and residue vacuum conversion units, Mozyr Refinery has invested approximately USD 740 million in fixed assets for the last two years.

The only CIS country which sees no changes is Ukraine. Not only any real projects haven’t been commenced beside modernization talks, but also only three plants are operational among six oil and gas refineries in Ukraine – Kremenchug Oil Refinery, Shebelin Gas Refinery, and since recently – Odessa Oil Refinery which had been idle for more than two years. The general picture is yet quite sad: raw materials delivery issues, illegal takeovers of refineries, lack of state regulation and comparatively cheap import of petroleum products postpone the modernization of Ukrainian plants for an indefinite period.