Russian refining shows signs of revival, needs investment
- Poten and Partners Inc., New York, NY (United States)
- Russian Association of Oil and Gas Producers, Moscow (Russian Federation)
- Rosneft, Moscow (Russian Federation)
The Russian refining industry appears ready for a comeback but needs investment from abroad. After 7 years of annual decline, output of petroleum products in the former Soviet Union (FSU), most of it from Russian refineries, is estimated to have dropped marginally last year. And an increase is possible this year. In 1994, Russia`s refineries, which account for two thirds of total FSU distillation capacity, yielded 176.2 million metric tons of oil products, compared with 214.1 million tons in 1993. Despite the precipitous decline in refinery production, net FSU exports oil refined products were down only 5% in 1994 at about 51.3 million tons. This occurred despite the decline in refinery production because of sizable contraction in oil consumption in Russian and the other republics. Russia, like the rest of the FSU, needs more than loans to produce oil or restore wells. According to the Ministries of Economics and Fuels and Energy, 90% of Russian enterprises need foreign capital. Investments to rebuild refining, gas processing, and petrochemicals are necessary, as are funds for modern technologies and equipment. Capital also is needed for extraction of resources that are remotely located or difficult to produce. In addition to providing a legal structure that provides a solid basis for investment, Russian must promote competition, change its tax system to raise revenue but allow companies to retain profits, and remove disincentives to investment for domestic and foreign enterprises.
- OSTI ID:
- 211895
- Journal Information:
- Oil and Gas Journal, Vol. 94, Issue 13; Other Information: PBD: 25 Mar 1996
- Country of Publication:
- United States
- Language:
- English
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