ROSN.L Share News (ROSN)

* Russian light oil products exports seen rising to 106 mln T in 2018 * Diesel exports seen increasing by 3 million tonnes this year * Russia also increases gasoline production By Vladimir Soldatkin and Maxim Nazarov UST-LUGA/PRIMORSK, Russia, March 12 (Reuters) - Russia plans to sharplyincrease fuel exports and carve out a larger share of the European marketfollowing an extensive $55 billion modernisation of its refineries, companies'plans and analysts' reports show. Russia embarked on a modernisation of its biggest refineries in 2011following a fuel shortage crisis. It also changed its tax system to favourproduction of cleaner and higher-quality fuel. The modernisation, which has not been completed yet, led to a surge inoutput of light products and exports, which has hurt European refineries'margins. Russian think tank Vygon Consulting expects Russian primary oil refiningvolumes to rise by 8 million tonnes this year, matching a record high of 289million tonnes reached in 2014 thanks to the modernisation and rising oilprices. The consultancy forecasts Russia's exports of light oil products, includingdiesel, will increase this year to 106 million tonnes from around 95 milliontonnes in 2017 as domestic consumption sags. According to Russian oil pipeline monopoly Transneft, more than 38 percentof oil products from the Baltic Sea port of Primorsk, Russia's key exportingoutlet, goes to the Netherlands' port of Rotterdam, followed by Germany (19percent), the United Kingdom (15 percent) and France (11 percent). According to the Primorsk data, it plans to ship 18.3 million tonnes ofdiesel this year, rising sharply to 19.8 million tonnes in 2019 and 23.9 milliontonnes in 2020. In total, Transneft plans to increase exports of ultra-lowsulphur diesel (ULSD) - the cleanest type of diesel used by motorists in Europe- by 3 million tonnes to 26 million tonnes this year. Andrew Reed, an analyst at U.S.-based ESAI Energy consultancy, said thatthanks to widespread hydrotreating investment more of Russia's surplus dieselhas become a clean product suitable for Europe. "Russia now exports more than 650,000 barrels per day of ULSD, enabling itto place more than 500,000 bpd of the product into that market," he said. "Exporting more clean diesel will enable Russia to continue expanding marketshare in Europe – to the detriment of competing exporters in the United Statesand the Middle East." With around half of Europe's cars fuelled by diesel and its refineriesunable to meet domestic demand, the region imports around 850,000 barrels perday of diesel. Nearly 20 percent of Europe's diesel imports arrive from the Eastof Suez refineries, according to consultancy Energy Aspects. NEW REFINING UNITS According to the industry sources and Reuters data, Russia plans tointroduce 15 new hydrocracking units allowing it to produce up 18.2 milliontonnes of ULSD by 2022 at their full capacity. The total diesel output, including non-ULSD, could reach 22 million tonnesif all 27 fuel oil residue conversion units are put into operation. As well as increasing diesel production, Russia is also on track to producemore gasoline. The same units will also be able to produce up to 10 milliontonnes of naphtha per year by 2022, which could be entirely processed to thegasoline if needed, according to industry sources and Reuters data. "We expect Russian gasoline supply to see strong growth this year. Growth inyields started already over the second half of 2017 (+0.4 percentage points),supported by new capacity," Eugene Lindell of Vienna-based JBC Energy said. "This year we see further gasoline-focused units coming online, of whichslightly over 70,000 bpd will be reforming capacity." Usage of diesel in Europe has been under scrutiny since Volkswagen, Europe's biggest carmaker, admitted to cheating U.S. emissionstests. German carmakers, including Daimler and BMW, faced abacklash against diesel technology, in which they have invested billions. The German government has sought to find ways to avoid bans on heavilypolluting diesel vehicles in major cities after a court ruling. Yet, even though sales of new gasoline cars in Europe are rising, the shiftis not yet there to force diesel out of the market, JBC Energy said in a recentreport, posing little threat to Russia's plans to increase diesel exports toEurope, at least for now. Following is a table of planned new hydrocracking units launch at Russianoil refineries, according to industry sources and Reuters data. The data belowrepresents the capacity, not the output, and does not include other advancedconversion units: Refinery Processing Capacity, Year of launch, mln T per estimated year TAIF Tar hydro 2.7 2018 conversion Taneko Tar hydro 2.0 2022 conversion TAIF Hydrocracker 1.0 2018 Tuapse Hydrocracker 4.0 2019 Orsk Hydrocracker 1.6 2018 Ufaneftekhim Hydrocracker 1.3 2018-2019 Komsomolsky Hydrocracker 2.0 2019 Novokuibyshev Hydrocracker 2.0 2019-2020 Achinsk Hydrocracker 2.0 2019-2020 Ilsky Hydrocracker 0.9 2020 Afipsky Hydrocracker 2.5 2020 Omsk Hydrocracker 2.0 2020 Antipinsky Hydrocracker 2.7 2022 Taneko Hydrocracker 1.8 2022 Ryazan Hydrocracker 2.2 2022 Total 30.7 (Reporting by Vladimir Soldatkin and Maxim NazarovEditing by Katya Golubkova and Susan Fenton)