More high sulphur oil in Ust-Luga

Transneft is looking into distinguishing of Ust-Luga as a direction for pumping high sulphur oil to unload Primorsk. The decision can be opposed by high sulphur oil suppliers.

Less is more?

Transneft OJSC is looking into distinguishing of a special direction for pumping oil with sulphur content of 2.5%. Such oil is supposed to go to port Ust-Luga in the Leningrad region. As the Company told IAA PortNews, this does not mean the construction of a new pipeline, so Ust-Luga port is likely to be used for high sulphur alone. 

The project of distinguishing of a special direction for high sulphur oil reflects the trend to export more heavy oil from Russia. Transneft data say that in October 2014 sulphur content in oil pumped to Primorsk was 1.5% while the maximum allowable limit is 1.55%. As total volume of oil pumped to Primorsk has decreased, the volume of high sulphur oil has not changed. In particular, high sulphur oil now comes from the Komi Republic. Sulphur content in oil delivered from Ukhta to Yaroslavl is 1.2% today while it used to be 0.9% before. 

Sulphur content in Ust-Luga oil was 1.59% for a long time but it has climbed to 1.65% by today.

So, a separate direction for high sulphur oil can result in creation of a specific grade of Russia’s export oil. However, this can lead to a variety of consequences. For example high sulphur oil producers who earlier had a possibility of blending can see reduced revenue amid general reduction of oil prices.

This issue is being discussed by relevant authorities. If the project is implemented, oil transshipment via port Primorsk will decrease while Ust-Luga is to boost its transshipment.

Nevertheless, general trend suggests that Russia is set to expand its domestic refining and improve the refinery yield.

It should be noted that Transneft earlier announced its plans on building up diesel fuel pumping to Primorsk through partial conversion of its oil facilities. The Company representatives say this will lead to reduction of oil exports via Primorsk from current 54.4 mln t to 43 mln t per year and increase of diesel fuel transshipment to 14.5 mln t in 2015.

Besides, under Lukoil agreement, an oil product pipeline is to link Primorsk and Vysotsk. It will have an option of expansion its initial capacity of 1.5 mln t to 5 mln t of diesel fuel per year. Meanwhile Transneft says this project is not likely to affect the loading of Primorsk. The pipeline is to be put into operation in November 2015.

So, the Baltic Basin sees a consistent trend of decreasing oil transshipment via port Primorsk and increasing diesel fuel transshipment via Ust-Luga and Vysotsk.

Vitaly Chernov