Russian refinery runs to trend slightly higher in August

Russia’s seaborne crude exports have averaged 3.33 Mbd in July, an almost 300 kbd m/m change, however expectations of a much more substantial plunge in oil outflows have not materialized. Partially this is due to additional seaborne cargoes being inserted into the month’s loading schedule from underperforming Druzhba deliveries (flows to Slovakia ended up being more than 100kt lower than the July nomination of 460kt, equivalent to 25 kbd), however underperforming refineries were an even more important factor.

The reinstatement of the gasoline export ban until the end of October 2024 has saw speculation abate as the previous months’ outlook was always marred by the lack of transparent government policy. For the next three months, gasoline exports out of Russia should scale back to the same 80-100 kbd that we witnessed across Q2, including volumes coming out of Belarusian refineries. Providing a sneak peek into the Russian authorities’ stance ahead of the autumn maintenance season, the vast spread between 92 RON and 95 RON gasoline remains in place, with the latter wielding a roughly ₽17-18,000/mt premium over the former ($200-210/mt). The spread between 95 RON and summer quality diesel remains rangebound at ₽12,500-13,000/mt ($145-150/mt), surpassing the same metric in Northwest Europe where it has trended around $100/mt.

Jet fuel has been the silent star of Russia’s refining slate lately, with kerosene prices soaring to all-time highs over the past two weeks. European prices are well above diesel quotes, trending around ₽82-83,000/mt ($945-950/mt), driven higher by strong domestic flight activity, continuously high government procurement of the fuel as well as regional disruptions to production. The latter is particularly true of the Far Eastern regions where a historic premium to Central Russian prices widened to new highs, with most recent trading sessions believed to be hovering within the ₽105,000-110,000/mt bandwidth ($1210-1270/mt).

When it comes to force majeure events, the latest instance has come from Russia’s largest capacity (450 kbd) refinery in Omsk, where a fire has debilitated the AVT-10 distillation unit. Whilst there are six distillation columns in Omsk, the AVT-10 unit is the second most important in terms of available capacity, at 120 kbd. Aggravating the woes of Gazprom Neft, the AT-9 distillation unit has not suffered at all from the blaze, however given the interconnectedness of the two columns (AT-9 not having a vacuum distillation unit of its own), the overall loss of capacity might be as high as 220 kbd in the first two weeks of August. By mid-month, both the units should be up and running. Unexpected disruptions are not only linked to primary capacity, to take but one example Lukoil’s ongoing travails with the 340 kbd Volgograd refinery are expected to continue for several weeks still. The hydrocracking unit was supposed to be down for maintenance in June, however the operator failed to return it to operation throughout July and the downturn might last all the way through mid-August.

Russia’s refinery runs, Mbd.

Source: Kpler.

With July refinery runs coming in exactly as we’ve predicted at 5.48 Mbd, we expect this month’s refinery performance to be balancing between returning condensate splitter capacities and the start of autumn refinery maintenance. The two-month halt in the operations of Gazprom’s 52 kbd Astrakhan condensate splitter has come to a close by the third decade of July, whilst the Surgut plant is set to return to full operations this month. Refinery maintenance in the European part of Russia will be centred around Rosneft’s Ryazan refinery, whilst in the Far East the high-impact development will be the one-month halt of 120 kbd CDU capacity in the Angarsk refinery. Considering refinery turnarounds will be tangibly lighter than in both 2022 and 2023 (in both cases September and October saw some 600-700 kbd offline as opposed to the current plan of 450-500 kbd), we expect August refinery runs to be slightly higher than in July, at 5.53 Mbd, only to edge slightly lower again in September and October.

‍

Want access to Insights on a regular basis?

Explore the full power of Insight and see how it can sharpen your competitive edge. Dive into a sample report or get in touch to discuss how we can tailor Insight intelligence to your needs.

Unbiased. Precise. Essential.‍

Curious? Request access to Kpler Insight today.