The planned changes to the Russian fuel oil export duty came under fire in June casting doubt on reform plans which are vital to Russia’s refinery modernization.
ESAI Energy Principal Andrew Reed said the oil export duty reform’s essence for the refining sector will not change but it will only be fully implemented in 2017 or 2018.
"The prospect of revisions to the oil export duty reform create uncertainty for refinery investment projects in Russia as well as in Europe and other markets that absorb Russian product exports," Reed added.
"At stake are the growth of Russian ULSD exports to Europe and the decline of straight run fuel oil and VGO supply to U.S. Gulf Coast."
The recently proposed duties represent Russia’s commitment to its refinery modernization program, CIS Watch said.
As part of the recent proposals, greater profits can be gained by complex refineries than they would under the existing reform.
A study by ESAI Energy about these reforms revealed that the refining sector will have 850,000 b/d of hydrocracking capacity by 2018 and is building other secondary units.
"And as a result, the life of simple refineries will be extended 1-2 more years. Thus refinery throughput will grow in 2015."
