Mikhail Skigin: “POT will handle new range of oil products”

Mikhail Skigin, Chairman of the Board of Directors of Petersburg Oil Terminal JSC, tells IAA PortNews about modernization of the terminal and oil product logistics in the region.

-    Mr Skigin, could you please tell about the terminal’s cargo mix today and its development in the future?

-    The oil market is changing following the Russia and global trends while POT, as a service company operating in the market, cannot but undergo changes together with it. 

For example, tax manoeuvre has triggered a considerable growth of oil conversion ratio at Russian refineries. Therefore, the share of light oil products in exports will anyway increase. 

Now, heavy fuel oil accounts for some 60% of the terminal’s total throughput with different light oil products – diesel fuel and kerosene – making about 40%. But this proportion will change soon. In 2018, the changes were seen, though not very distinctly, because the market was still full of considerable volumes of heavy fuel oil produced earlier and expected to be soled by its owners. The same trend is seen in the first half of 2019. But in the nearest future the process will speed up. 

In the segment of light oil products I would like to distinguish a category of “dirty distillates”. It is not marketable diesel fuel, for example low-viscosity marine fuel or heating fuel. The share of this category is on the rise at Petersburg Oil Terminal and we hope for a further growth in the mid-run. Such products are in high demand in the market. They are primarily supplied to POT by railway, our key supply channel.

- Is there a possibility to resume supplies of oil products by pipelines?

- There is a possibility though a vague one. We continue a dialogue with Transnefteprodukt but there are no clear dates or understanding about the revival of pipeline supplies. We apply joint efforts to reach a compromise hoping for far-sightedness of our partners. Definetely, in terms of oil product supply diversification and strategic safety of Russia, it is reasonable to have several marketing channels for domestic goods.
 
- Are you going to expand your footprint in the bunkering market of the region from 2020 in view of forecasted deficit of low-sulfur fuel?

-    Key positions in the bunkering market are strongly held by vertically integrated companies. Therefore, we have made a strategic decision to leave it. This market is losing its interest for us. We are not competitive in it since we have no access to the resources and, therefore, cannot offer an affordable price to our clients. In this case, what is the reason in keeping a company with its staff, equipment and minimum contracts?

-    Is there an investment programme for the development of the terminal, what are its parameters and sources of financing?

-    It is a high time that POT started changing. Therefore, we have developed an investment programme that will be implemented in the nearest future. 

Petersburg Oil Terminal is virtually divided into two parts: the old and the modern one. The terminal has been partial built and renovated recently. Those facilities have been automated and furnished with state-of-the-art equipment. Now, the new investment programme foresees upgrading of the obsolete facilities. Complete automation and introduction of remote control of all technological processes will let POT handle a new range of oil products. 

It is not time to announce the scope of investments, it has not been determined yet but the amount is high. There diverse sources of financing under consideration: from raising loans to attraction of a strategic investor.

-    Railways deliver most of oil products to POT. How do you build relations with Russian Railways? 

-    Over the long years of cooperation with Russian Railways we have succeeded in building an excellent system of interaction. We are in permanent contact with the company managers and I would like to emphasize their profound understanding of the oil transportation market. 

To improve the logistic process planning, a daily log-control of oil products shipments to our terminal was introduced last February jointly with Russian Railways. That has minimized irregular shipments of oil products to the terminal. We are set to continue improvement of information exchange with Russian Railways to improve the schedule for trains bound to the Avtovo station. 

Thus, I have every reason to say that smooth railway supplies of cargo to the terminal is among our competitive advantages, along with flexible approach to our clients and high professionalism of POT team.

Interviewed by Nadezhda Malysheva