Lukoil Opens Russia's Largest Vacuum Gasoil Processing Complex
Lukoil, Russia's No. 2 oil producer, opened the country's largest vacuum gasoil (VGO) hydrocracking facility at its Volgograd refinery on Tuesday, built as part of a sweeping modernisation of the country's refineries.
The $2.2 billion VGO complex, which also includes hydrogen and sulphur production, can process up to 3.5 million tonnes of VGO a year. It will help Lukoil improve overall fuel quality and increase output of ultra-low sulphur diesel by 1.8 million tonnes annually, from nearly 4 million tonnes currently, the company said.
Russian oil companies and the government agreed on plans to modernise refineries in 2011 after gasoline supplies almost ran dry due to a lack of modern refining capacity.
The companies pledged to install 130 new facilities by 2020 that will enable Russia to increase production of higher-margin lighter products.
VGO is mostly used as feedstock to produce diesel and gasoline. Until now, Lukoil exported all the VGO produced at the Volgograd refinery - around 200,000 tonnes a month - via the Black Sea port of Novorossiisk.
Industry sources have said Lukoil will use around 100,000-110,000 tonnes of VGO a month for making refined oil products at the plant, and the rest will be exported from Novorossiisk.
"There won't be a sharp increase in diesel exports, as it had been through before. Maybe an additional couple of 30,000-tonne cargoes a month," a trader said.
"Now, these volumes will be pretty timely in the Mediterranean, taking into account refining throughput cuts in Italy and a strike in France," he said.
France is increasing its imports of refined fuels after a more than week-long strike by oil workers disrupted supply, industry sources said.
Lukoil's Volgograd refinery has an annual capacity of 14.5 million tonnes, or 290,000 barrels a day.
(Reporting by Olesya Astakhova; additional reporting by Natalia Chumakova; writing by Vladimir Soldatkin)
