Gazprom Neft wants to keep refining at record levels in 2023

“Gazprom Neft“plans to keep the volume of oil refining at its Russian refineries (refineries) in 2023 at a record level of 2022, the director of the Directorate of Oil and Gas Refining told reporters”Gazprom oil” Oleg Vedernikov. In 2022, according to the company’s forecast, the figure will exceed 41 million tons.

“In 2023, we predict that, without taking into account the factors of planned repairs, we will keep the volume of refining at the level of 2022. At the same time, thanks to the advanced oil refining complex, we will ensure an increase in the output of fuel and other oil products with the volume of raw materials refining at the level of 2022. “, Vedernikov said.

According to him, the growth in oil refining volumes in 2022 will be ensured by the modernization program of the Moscow and Omsk refineries of the company (they process 12 million tons and about 20.5 million tons of oil per year, respectively). In January-September 2022, the total volume of oil refining at these refineries increased by 3.5% compared to the same period in 2021 and by 11.5% compared to 9 months of 2020, Vedernikov specified. Gazprom Neft also owns a stake in a joint venture with Rosneft – Refinery “Slavneft-YANOS» (about 15 million tons of oil per year).

Oleg Belyavsky, General Director of the Omsk Refinery, recalled that in 2022, a complex for deep oil refining was put into operation at the enterprise. In 2023, it is planned to launch a primary oil refining complex with a capacity of 8.4 million tons per year, which will allow decommissioning six plants of the previous ecological generation, he explained. Also, the AVT-10 unit is being modernized at the plant, which will increase the yield of light oil products, Belyavsky added.

The director of the refinery specified that the Omsk Refinery now ensures the depth of oil refining at the level of almost 100%, and the yield of light oil products is more than 80%. As a result, the refinery may completely abandon the production of fuel oil, and its production volumes will remain only subject to market demand, Belyavsky noted.

In 2021, Gazprom Neft increased revenue compared to 2020 by 76.8% to RUB 2.68 trillion, while net profit increased 2.1 times to RUB 344.1 billion. In 2022, the company did not disclose financial statements. On December 16, the Board of Directors of Gazprom Neft recommended paying dividends for the first 9 months of 2022 in the amount of RUB 69.78. per share. Interim dividends for 9M 2021 amounted to RUB 40. per share, at the end of the year – 56 rubles.

According to Rosstat, over the 10 months of 2022, the volume of oil refining in Russia decreased by 3.6% year-on-year to 228 million tons. At the same time, the production of more expensive light oil products, gasoline, increased (by 4.5% to 35 million tons) and diesel (by 5.4% to 69.8 million tons). Naphtha production in Russia decreased by 14.9% to 9.5 million tons, while heating oil production decreased by 8.2% to 33.9 million tons.

After the start of the NWO in Ukraine, Russian oil and oil products fell under the sanctions of the West. The United States and Great Britain refused to supply supplies from Russia in March, and on December 5, the EU embargo on offshore supplies of Russian oil came into force. A similar embargo on Russian oil products will come into force on February 5, 2023. At the same time, a price ceiling on Russian oil products will come into effect. It is assumed that two price ceilings will be set – for more expensive diesel and cheaper petroleum products such as naphtha. The level of such ceilings has not yet been established.

As a result, over the 10 months of 2022, Russian companies increased the supply of diesel to the domestic market by 30% year-on-year to 41.6 million tons (Vedomosti wrote about this on November 9), and also increased the supply of fuel oil to the countries of the Middle East and Asia has almost doubled since the beginning of 2022 (see the December 6 episode).

Finam FG analyst Sergey Kaufman notes that Gazprom Neft is the best in the sector to survive the current crisis due to its focus on the domestic market. In 2021, the company received 31% of its revenue from the sale of petroleum products from exports to non-CIS countries. A senior analyst agrees with him “BCS The World of Investment” by Ronald Smith. He explains that companies’ relatively modern refineries are able to produce more expensive light oil products instead of cheaper fuel oil, improving refining economics.

Kaufman sees the company’s refining forecast for 2023 as “rather optimistic.” He draws attention to the fact that it is more difficult to redirect oil products from the European market to the Asian market than oil, since China and India are not interested in sharing the refining margin with Russia. According to the analyst, the volume of oil refining by Gazprom Neft in 2023 may decrease by up to 5% in annual terms. Smith adds that after the embargo on the supply of petroleum products to the EU comes into force, Russian companies as a whole may have to reduce refining.