Gazprom Neft Board of Directors reviews refineries modernisation programme and company procurement structure

28 November 2014

The Board of Directors of Gazprom Neft has reviewed information on the progress of the modernisation of the company’s oil refining facilities, and the sourcing of products for the domestic market.

A quadripartite agreement signed between Gazprom Neft and the Federal Agency for Technical Regulation and Metrology, the Federal Antimonopoly Service, and the Federal Service for Ecological, Technological and Nuclear Supervision in July 2011 established the company’s obligations regarding its fulfilment of investment programmes in oil refining and the production of oil products, consistent with regulatory requirements. Pursuant to its obligations under this agreement Gazprom Neft, in 2012 — 2013, brought into production a complex for hydro-treatment of fluid catalytic cracking (FCC) gasolines and diesel fuels at its Omsk Refinery, as well as facilities for light naphtha isomerisation and FCC gasolines hydro-treatment at its Moscow plant. Total investment in the fulfilment of these projects is in the order of RUB27 billion.

The implementation of programmes directed at improving the quality of the fuels produced allowed Gazprom Neft, from as early as 2013 and ahead of schedule, to transfer completely to the production of Euro-4 and Euro-5 gasoline and diesel fuels, consistent with Russian regulation. High-octane gasoline and diesel fuels produced at the company’s Omsk and Moscow refineries are, today, full compliant with Euro-5 emissions standards.

Following completion of the first stage of the refinery modernisation programme, with the fuels produced having been brought up to European standards, the company embarked on the second stage — improving the depth of refining and increasing production of light oil products. As a result of the introduction of waste recycling processes, production of motor fuels is expected, by 2020, to increase by 17 percent, with refining depth increasing from 78.6 to 95 percent.

Projects being implemented over the next three years include, at the Omsk Refinery, reconstruction of a catalytic cracking unit, reconstruction of an alkylation unit with increased production capacity, and construction of a MTBE facility, and at the Moscow Refinery construction of a catalytic reforming unit and reconstruction of a catalytic cracking unit, again with increased capacity. Following such thoroughgoing modernisation Gazprom Neft’s Russian refineries are expected to achieve international standards of refining complexity.

The Gazprom Neft Board of Directors has also undertaken a review of the company’s procurement structure, with the company now actively engaged in the implementation of an import substitution programme across various business areas. In particular, a list of alternative producers, able to meet GPN’s specific needs, has been drawn up; a range of strategic partnerships have been entered into with Russian enterprises; and a number of specialist working groups have been established to assess capabilities of both Russian and alternative markets.