By JAKE RUDNITSKY
Russian crude oil exports declined to the lowest level in
at least six years as the nations refiners carried
out less maintenance
, boosting fuels
Crude shipments dropped 5.3% to 4.95 million bpd in the six
months to June from a year earlier, according to CDU-TEK,
part of the Energy Ministry. Production rose 1% in the same
Russian refiners including OAO Rosneft reduced maintenance
programs in the
first half of the year, halting 15 percent less capacity
than a year ago. That enabled them to process more crude as
lower export duties on fuel oil and diesel incentivize the
output of those products, according to KBC Energy Economics
and UralSib Financial Corp., an investment bank.
crude intake was
growing strongly in the first half of the year as the
Spring refining maintenance
was very mild,
David Wech, managing director at JBC Energy, said July 3 in
an e-mail. This explains the decline in crude oil
Fuel oil production gained 5.8% in the year to May,
reaching a five-year high despite billions of dollars in
investment for government-mandated upgrades intended to
boost yields of premium products such as diesel and
gasoline. Fuel oil, a more polluting fuel used in shipping
and power production, accounted for 39% of refinery
output, ministry data
show, compared with less 10% in Germany.
Fuel oil production is increasing as the planned
upgrades are taking longer than planned, said Ehsan
Ul-Haq, senior market consultant at KBC.
Russia plans to increase fuel oil export duties, aiming to
reach parity with the crude levy by 2015, as it seeks to
encourage oil companies to upgrade Soviet-era facilities
. The government may
not meet the 2015 deadline, Finance Minister Anton Siluanov
said last month.
Small refineries are driving the increase in primary
and this trend will
only stop when the government raises the fuel oil export
duty to a prohibitive level, Alexei Kokin, an oil and
gas analyst at UralSib in Moscow, said July 2 by phone.
Most crude exports this month are taxed at $385.20/ton, or
about $52.55/bbl, compared to $254.20/ton for fuel oil,
according to Finance Ministry pricing data. Fuel oil duties
were raised relative to crude in 2011.
Refiners will carry out more work this quarter, when a
daily average of 512,000 bbl will halt, up from 279,000 bbl
in the first six months of 2014, ministry data show.
Fuel oil output rose to 32.7 million tons in the five
months to May, the highest since at least 2010, data on the
ministry website show. Jet fuel output rose by 14%,
outpacing diesel at 11% in the five months to May, the last
month for which ministry figures are available.
The crude export figures are at the lowest since 2008 when
Bloomberg started collecting the data. They include transit
volumes from former Soviet Republics, with the exception of
Kazakh exports via the Caspian Pipeline Consortium and by