Triple-Nine Black Gold

Oil prod­ucts made by Mozyr Oil Re­fin­ery sell well in the Euro­pean Union and the Com­mon­wealth of In­de­pen­dent States

Economy of Belarus - - CONTENTS -

Oil prod­ucts made by Mozyr Oil Re­fin­ery sell well in the Euro­pean Union and the Com­mon­wealth of In­de­pen­dent States

Mozyr Oil Re­fin­ery is a rapidly de­vel­op­ing en­ter­prise and is one of Be­larus’ largest tax­pay­ers. Founded in 1975, within 40 years the re­fin­ery has gone all the way from pro­duc­ing the first gaso­line in Polesye to of­fer­ing the wide choice of Euro­pean-qual­ity prod­ucts. Last year the en­ter­prise pro­cessed over 12 mil­lion tonnes of oil, in­creas­ing the oil con­ver­sion ra­tio up to 72% and the out­put of light oil prod­ucts up to 60%. The per­for­mance stan­dards are some of the best in the post-Soviet space. Gaso­line and diesel fuel made by Mozyr Oil Re­fin­ery are now com­pli­ant with Euro 5 stan­dards. The qual­ity of oil prod­ucts that al­lows the com­pany to suc­cess­fully com­pete in the Euro­pean Union and the Com­mon­wealth of In­de­pen­dent States is se­cured through regular mod­ern­iza­tion.

Deeper Oil Con­ver­sion

The oil con­ver­sion ra­tio di­rectly in­flu­ences the ef­fec­tive­ness of oil pro­cess­ing. Ev­ery per­cent mat­ters. Ev­ery per­cent means mil­lions in losses or gains.

Ini­tially the oil re­fin­ery was de­signed with the oil con­ver­sion ra­tio as low as 50%. The high de­mand for fur­nace oil in the Be­laru­sian en­ergy in­dus­try and lower oil pro­cess­ing costs greased the way for the com­pany’s smooth op­er­a­tion back then.

“But if we are to work on mar­ket terms, we have to con­stantly de­velop and make prod­ucts that meet Euro­pean stan­dards. And the stan­dards get tougher all the time due to en­vi­ron­men­tal pro­tec­tion laws and re­quire­ments of au­to­mo­bile man­u­fac­tur­ers,” noted Ana­toly Kupriyanov, Direc­tor Gen­eral of Mozyr Oil Re­fin­ery.

Since prices for fur­nace oil are on decline on the global mar­ket, it is no longer prof­itable to sell fur­nace oil. On top of that, prices for raw hy­dro­car­bons Be­larus buys have been in­creased due to tax ad­just­ments in the Rus­sian oil in­dus­try. Mean­while, fall­ing oil prices (hence re­duced prices for oil prod­ucts sold abroad) have di­min­ished the al­ready thin profit mar­gin of Be­laru­sian oil re­finer­ies. This is why it is nec­es­sary to re­duce prime costs and im­prove per­for­mance fast.

By the way, many Euro­pean and Rus­sian oil re­finer­ies have aug­mented their in­vest­ment in higher oil con­ver­sion ra­tios in view of the mar­ket sit­u­a­tion. What Mozyr Oil Re­fin­ery does to­day is part of the global trend. The Be­laru­sian com­pany is in a rather good po­si­tion. Mozyr Oil Re­fin­ery started re­tool­ing back in the 1990s. Back then the com­pany opted for stepby-step re­fit­ting of the oil re­fin­ery through tech­nolo­gies able to se­cure higher oil con­ver­sion ra­tios and Euro­pean qual­ity stan­dards.

In 2010 the re­tool­ing cam­paign en­tered the fi­nal, most ac­tive phase, with at least one new plant com­mis­sioned ev­ery year. In the last five years the com­pany spent a to­tal of $1.13 bil­lion on build­ing new in­stal­la­tions. The com­pany com­mis­sioned plants for gaso­line hy­drodesul­fu­r­iza­tion through cat­alytic crack­ing, plants to make hy­dro­gen, plants for the hy­dro­gen re­fin­ing of diesel fuel, iso­mer­iza­tion, vac­uum dis­til­la­tion of fur­nace oil, and an overpass struc­ture for the timed dispensing of light oil prod­ucts.

No-Non­sense Mod­ern­iza­tion

The com­pany is now busy im­ple­ment­ing sev­eral projects at once. They are de­signed to crown the mas­sive re­tool­ing cam­paign. The most im­por­tant ones in­clude the con­struc­tion of a com­bined plant to make high-oc­tane gaso­line com­po­nents. The plant is sched­uled for com­mis­sion­ing in Q4 2015. When added to gaso­line, oxy­gen­con­tain­ing com­pounds can re­duce fuel con­sump­tion as well as the share of in­com­plete-com­bus­tion prod­ucts in ex­haust gases. Once the plant is on­line, Mozyr Oil Re­fin­ery will be able to make more AI-95 (Euro 5) gaso­line. Apart from that, the com­pany will no longer have to im­port ex­pen­sive high-oc­tane com­po­nents.

The con­struc­tion of the fa­cil­ity for the hy­dro­c­rack­ing of black oil is the largest project in the his­tory of Mozyr Oil Re­fin­ery. Priced at $1.4 bil­lion, the fa­cil­ity will in­clude a com­bined hy­dro­c­rack­ing plant and plants to make hy­dro­gen and sul­fur. Once the fa­cil­ity is com­mis­sioned in late 2017, Mozyr Oil Re­fin­ery will be able to up­grade its oil con­ver­sion ra­tio up to that of Europe’s best oil re­finer­ies — 89%. Re­spec­tively the com­pany will re­duce fur­nace oil pro­duc­tion in fa­vor of light oil prod­ucts hav­ing a higher added value. The out­put of light oil prod­ucts will ex­ceed 71%.

Cer­tainly, the cur­rent prices on the mar­ket of oil and oil prod­ucts make the re­tool­ing process dif­fi­cult. How­ever, the man­age­ment be­lieves that de­spite the lower net profit the com­pany will have enough money to fi­nance cur­rent op­er­a­tions. Loans are in­tended to fi­nance in­vest­ment projects.

Once the fa­cil­ity for the hy­dro­c­rack­ing of black oil is com­mis­sioned, the com­pany’s per­for­mance will go up dramatically. It will al­low Mozyr Oil Re­fin­ery to stay com­pet­i­tive re­gard­less of crude oil prices. This is why the com­pany in­tends to earn $150 mil­lion in ex­tra profit as early as 2018.

For now the com­pany views the cur­rent sit­u­a­tion pri­mar­ily as a chal­lenge and a no-non­sense call to ex­pe­dite re­tool­ing and mod­ern­iza­tion of the pro­duc­tion as­sets. The man­age­ment in­tends to stay on sched­ule.

“If we don’t do it, we will have very lit­tle room to se­cure net profit, which is needed to re­solve cur­rent prob­lems and con­tinue the up­grade of the com­pany,” ex­plained Ana­toly Kupriyanov.

High Qual­ity Stan­dards

Mean­while, ex­perts es­ti­mate that the Be­laru­sian oil pro­cess­ing in­dus­try is al­ready well ahead of sim­i­lar in­dus­tries in Rus­sia and Kaza­khstan. Here are some facts. As of 1 Jan­uary 2015 the only kind of diesel fuel avail­able at Be­laru­sian gas sta­tions is the one that is in com­pli­ance with im­proved en­vi­ron­men­tal stan­dards. Ac­cord­ing to the Cus­toms Union clas­si­fi­ca­tion, the diesel fuel is marked as K5 while the Euro­pean clas­si­fi­ca­tion la­bels it as Euro 5. Rus­sia will in­tro­duce the same re­quire­ment only in 2016. For now Rus­sian gas sta­tions sell K4 (Euro 4) diesel fuel while Kaza­khstan’s diesel fuel’s stan­dards can be as low as K3 (Euro 3).

As for gaso­line, Rus­sia and Be­larus will sus­pend sales of class 4 gaso­line on 31 De­cem­ber 2015 in ac­cor­dance with the Cus­toms Union’s tech­ni­cal reg­u­la­tions on fuel qual­ity. But Mozyr Oil Re­fin­ery fully com­mit­ted to mak­ing gaso­line with the top en­vi­ron­men­tal stan­dard K5 as early as 2014.

The oil prod­ucts made by Mozyr Oil Re­fin­ery are com­pli­ant with mod­ern Euro­pean re­quire­ments. Some of the out­put is sold on the home mar­ket while up to 70% of the out­put is ex­ported to Europe,

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