7. overview of chemical sector in russia and opportunities for chinese enterprises, by sandjar turgunov, creon energy en
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Rosneft is the largest oil producer and refiner in Russia. The document discusses Russia's methanol and mineral fertilizer markets and production. It notes that 9 plants produced methanol in Russia in 2016, with total production at 4.2 million tons. Methanol production capacity is growing through both new plants and reconstruction of existing facilities. Mineral fertilizer production meets domestic demand, with over 70% of output exported annually, mainly to Brazil, China, and the US. Several new methanol and fertilizer plants are planned or under construction in Russia to further increase production capacity.
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7. overview of chemical sector in russia and opportunities for chinese enterprises, by sandjar turgunov, creon energy en
- 1. Agrochemistry and oil refining in Russia S.D. Turgunov General Director
- 3. 0 500 1000 1500 2000 2500 3000 3500 4000 4500 5000 2008 2014 2015 2016 2017 kt NZSP Ammoni Novatek Yurkharovneftegaz Acron Angarsk NKhK Nevinnomysski Azot NAK Azot Shchekinoazot Sibmetakhim Togliattiazot Metafraks Methanol production in Russia 3 3998 3978 4201 4301 4301 9 plants were produced methanol in Russia in 2016 Production potential in Russia is growing both due to commissioning of new plants (238 ktpa at Ammoni) and reconstruction of the existing plants Reconstruction of the methanol plant at Metafraks continued in 2016; its capacity was increased to 1 mln 100 ktpa. After completion of the second stage of the reconstruction, capacity of the company will increase by 10% to 3.37 t/d (1,200 ktpa) Russian average capacities utilization, % 2014 2015 2016 91 89 87 Methanol production capacities in Russia 3 619 3 644 3 716 2 106 2 386 2 204 0 500 1000 1500 2000 2500 3000 3500 4000 2014 2015 2016 kt production Consumption Balance of methanol production and consumption in Russia Production capacities are increasing, but the utilization factor is decreasing in Russia on average.
- 4. 4 Consumption and supplies of methanol in Russia Formaldehyde (formalin, UFC) 37,7% Isoprene 12,3% MTBE 19,3% Oil and gas industry 14,9% TAME 2,2% Chemistry 3,7% Acetic acid 4,2% Others 5,7% Structure of methanol consumption in Russia, 2016 Demand of the internal market is fully met by the internal production resources; no import. Share of commercial methanol (supplies to internal market) is over 40% of the total production volume in recent years. Due to a decrease in the demand from gas plants in 2016, supplies to Russian consumers reduced by 195 kt and made 1 mln 490 kt. 715 kt of methanol or 19% of the total volume of produced product was processed directly by manufacturing plants. Russian structure of methanol consumption is different from the global one. Consumption of methanol for formaldehyde on the global market is only 30%; about a half of the consumed methanol in Russia is accounted for methanol (including isoprene production). Over 30% of methanol in the world is consumed as a fuel either directly or indirectly through MTBE/TAME. Methanol is not used as an alternative fuel in Russia and the share of oxygenates in the structure of methanol consumption is about 20%. 1 513 1 266 1 514 678 694 714 1 428 1 683 1 490 0 500 1000 1500 2000 2500 3000 3500 4000 2014 2015 2016 kt Commercial Internal consumption export Structure of distribution of methanol produced in Russia
- 5. 5 Methanol supplies. Export Finland 52% Kazakhstan 2% Slovakia 12% Poland 15% Romania 6% Belarus 2% Ukraine 1% Germany 4% Lithuania 4% Others 2% Export is regulated by the internal demand Marked growth in demand at a small increase in production resulted in a sharp reduction of export in 2015 (minus 247 kt) Decrease in methanol consumption by Russian consumers in 2014 and 2016 was the reason for export growth to 1,5 mmt Main countries receiving Russian methanol in 2016 Belgium Great Britain Sweden Denmark Poland Netherlands Others Finland (consumption) 140 kt(9%) a half of domestic methanol is supplied to customers not directly, and through the ports of Finland where methanol needs to be brought by rail Significant part of methanol supplied from Russia to Finland (660 kt from 800 kt in 2016) is transited to other countries. Russian methanol is also transited through Slovakia. 42% 35% 41% 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 1,1 1,2 1,2 1,3 1,3 1,4 1,4 1,5 1,5 1,6 2014 2015 2016 mmt Export Share of export in production
- 6. Methanol production projects in Russia 6 EKOZON Ltd . (1.6) 2025 MetaSev (1.65) 2020 BGKhK (1.7) 2025 Russian Investments Shchekinoazot (0.45) 2018 Shchekinoazot (0,5) 2021. OTEKO (3.5) 2021 RICOAL (1.9) 2021 MTO TPGK (1.3) 2023 Mangazeya (0.1) 2021 UralMethanolGroup (0.6) 2020 YaTEK (1.7) SUEK and Marubeni YatEK (1.7) Mitsubishi Corporation RUS (1) 2025 ESN (1.2) 2021 NKhG (1.8) 2021 17 projects altogether with the design capacity of 20,7 mmt excluding projects, the capacity of which is not announced yet (Russian Investments, SUEK and Marubeni)
- 7. 2,2 2,1 2,3 2,3 2,3 1,5 1,9 2,3 0,0 0,5 1,0 1,5 2,0 2,5 Leningrad Region Arkhangelsk Region Rostov Region Krasnodar Territory Primorsky Territory Sakhalin Region Sverdlovsk Region Tula Region USD/mmBTU Russian gas prices regulated by Federal Tariff Service 7 RICOAL OTEKO, Taman Mitsubishi, Sakhalin NKhG, Kozmino UralMethnolGroup, Nizhni Tagil Shchekinoazot, Pervomayski Russian Investments BGKhK, Ust Luga NGSK, Ust Luga Ekozon, Pikalevo
- 9. 9 Balance of production and consumption of mineral fertilizers in Russia (based on 100% nutrient materials) Production and consumption of mineral fertilizers in Russia Type structure of mineral fertilizers production in Russia, 2016 18,3 19,6 19,9 20,7 5,3 5,4 4,6 5,5 80,7% 86,4% 86,6% 86% 77% 78% 79% 80% 81% 82% 83% 84% 85% 86% 87% 88% 0 5 10 15 20 25 2013 2014 2015 2016 mmt production Consumption Utilization of capacities in Russia Main trends of the Russian mineral fertilizers market: Russian market of mineral and chemical fertilizers is consolidated: • Main players in the segment of nitrogen and phosphoric fertilizers: MCC EuroChem, Uralchem, PhosAgro and Acron. • Main player on the ammonia market is Togliattiazot – capacities of the plant make 22% of the Russian ammonia production volume • Key player on the carbamide market in Russia is Nak Azot – 17% of the Russian carbamide production volume Market of mineral fertilizers grows by 4% on average in 2016. phosphoric fertilizers 17% nitrogen fertilizers 45% potassium fertilizers 38% 2015 2016 Phosphoric fertilizers 7% 9.8% Nitrogen fertilizers 5.30% 8.5% Potassium fertilizers -4.10% -3.8% Growth rates of mineral fertilizers production by types The only segment where the production is dropping is the segment of potassium fertilizers. This can be explained by the fact that Uralkali reduced the capacities because of the accident at the Solikamsk-2 mine at the end of 2014. The volume of production did not restore. (based on 100% P205) (based on 100% N) (based on 100% K2O)
- 10. China 27% Brazil 17% India 10%USA 6% Indonesia 6% Poland 5% Malaysia 5% Others 24% Brazil 15% Ukraine 15% China 10% Estonia 6%UAE 5% Turkey 5% India 4% Others 40% 10 13,1 14,3 15,4 15,3 71% 73% 77% 74% 68% 69% 70% 71% 72% 73% 74% 75% 76% 77% 78% 11,5 12,0 12,5 13,0 13,5 14,0 14,5 15,0 15,5 16,0 2013 2014 2015 2016 mmt export Share of export in production Export of mineral fertilizers from Russia (based on 100% nutrient materials) Limited volume of the domestic market determines the export orientation of Russian manufacturers (steadily over 70% in production) Profitability of production and competitiveness of the Russian product, including foreign markets, grow in Russia due to the expenditures in roubles Brazil (21%), China (11%) and USA (8%) are the key markets for Russian fertilizers Brazil 28% USA 13% Ukraine 7% Turkey 5% Peru 4% Estonia 3% India 3% Others 37% Export of nitrogen fertilizers from Russia Export of potassium fertilizers from Russia Export of mixed fertilizers from Russia
- 11. 11 Prices for mineral fertilizers Reduction of global prices is mainly determined by the decline in demand from the key consuming regions (China, Latin America, etc.). Rates of decline for different types of fertilizers are from 15% for ammoniac saltpeter to 35% for potassium fertilizers In the conditions of reduction of global prices for mineral fertilizers, Russian manufacturers increase the production volumes due to the weak rouble and continue putting new plants into operation Average prices for phosphoric fertilizers, $/t 2015 2016 Annual change Diammonium phosphate, FOB USA 458 345 -25% Monoammonium phosphate, FOB Baltic Sea 459 338 -26% Triple superphosphate, FOB Tunisia 303 291 -4% NPK 16-16-16, FOB CIS countries 355 283 -20% Average prices for potassium chloride, $/t 2015 2016 Annual change Spot FOB Baltics 288 232 -19% Spot FOB Vancouver 385 291 -24% Average prices for nitrogen fertilizers 2015 2016 Annual change Ammonia, FOB Yuzhny 387 236 -39% Carbamide, FOB Yuzhny 271 199 -27% Аmmoniac saltpeter, FOB Black Sea 222 165 -26% Carbomide-ammonium mixture , FOB CIS countries 198 136 -31%
- 12. 12 Projects Apatite concentrate Plant Capacity increase, kt Commissioning Kovdorskiy GOK (EuroChem) 441 Stage I - 2015 (completed)Stage II - 2018 North-Western Phosphorous Company (stage II) (Acron) 1,000 2018 (possibly 2017) Apatit, Kirovsk (PhosAgro) 800 Completed Total 2,241 Potassium chloride Plant Capacity increase, kt Commissioning EuroChem VolgaKali Potash (stage I) 2,300 2018 Uralkali,Berezniki (extension of Solikams-3) 600 2017 Uralkali,Berezniki (Ust-Yayva area + Solikamsk-3) 2,800 2025 VerkhnekamskPotash Company, Berezniki/TalizkyGOK (Acron) 1,000 2021 EuroChem Usolsky Potash Plant (stage I) 2,322 2018 Total 9,022 Ammonia Plant Capacity increase, kt Commissioning Ammoni, Mendeleyevsk 455 (717 w/o methanol) Completed Metafraks, Gubakha 450 2020 Nemanazot, KalinigradRegion 1,500 n/a Kuybyshevazot, Togliatti 489.1 2017 Acron, Veliky Novgorod 700 2016 (completed) Shchekinoazot 135 2017 Novomoskovsky Azot (EuroChem) 28 completed PhosAgro Cherepovets (PhosAgro) 760 2017 Integrated mining and chemical plant in the Republic of Sakha 200 2022 Integrated mining and chemical plant in the Khabarovsk Territory 1,000 n/a Azot, Kemerovo (SDS Azot) 77 n/a MCC EuroChem, Kingisepp 1,000 2018 Nakhodka Mineral FertilizersPlant 1,100 2019-2021 Total 7,894
- 13. 13 Проекты Plant Capacity increase, kt Commissioning Ammoniac saltpeter Angarsk nitrogen fertilizer plant (SDS Azot) 270 2017 Ammoni, Mendeleyevsk 380 completed Novomoskovsky Azot (EuroChem) 340 completed Azot, Kemerovo (SDS Azot) 500 n/a Dorogobuzh (Acron) 400 n/a Total 1,890 Carbamide Novomoskovsky Azot (EuroChem) 100 Under revamping Ammoni, Mendeleyevsk 717.5 completed Acron, Veliky Novgorod 150.2 Under revamping PhosAgro Cherepovets (PhosAgro) 500 2017 Kuybyshevazot, Togliatti 547.5 2019 Nemanazot, KaliningradRegion 1,100 n/a Metafraks, Gubakha 560 2020 East Siberian GKhK 500 2022 (?) Togliattiazot 206.5 2020 Mineralnieudobrenia, Perm 275 (increase) 2019 Azot subsidiary of URALCHEM 319 2019 Total 4,976 Calcium carbonate-ammonium nitrate KChKhK subsidiary of URALCHEM 600 (increase) (?) Mixed mineral fertilizers Fosforit (EuroChem) 150 (?) Dorogobuzh (Acron) 110 2019 Nevinnomyssky Azot (EuroChem) 60 (NK) 2018 EuroChem Belorechenskie mineralnieudobrenia 500 (NPK) 2019 (designing) Acron 60 (azophoska) 2016 (completed) Metakhim (PhosAgro) 105/135 (wet-process phosphoric acid/NPK) 2018 (favorableconclusion of expert review) Total 1,015 Ammonium sulphate EuroChem Belorechenskie mineralnieudobrenia 55 (NS) 2017 Kuybyshevazot (ammonium sulphate-nitrate) 385 2018 Kuybyshevazot/TrammoAG 130 2017 PhosAgro Cherepovets 300 2017 Total 870
- 15. Rosneft 26,2% Lukoil 15% Gazprom neft 11,2% Surgutneftegaz 6,6% Bashneft 6,6% Slavneft 5,3% Mini-refineries 3.3% Taneco 3,1% Taif NK 3% Others 20% Volumes of oil production and primary oil refining in Russia 15 1,2% 1,3% 1% 0,6% 1,4% 2,5% 2,6% 3,5% 3,4% 5,2% -2,1% -1,2% 505 511 518 523 527 534 548 250 257 265 275 289 283 279 -3% -2% -1% 0% 1% 2% 3% 4% 5% 6% 0 100 200 300 400 500 600 2010 2011 2012 2013 2014 2015 2016 mmt Rate of oil production growth Rate of primary refining growth Oil production Primary oil refining Rate of oil production growth is restoring after a decline in 2014 and makes 2.5% in 2016. Russian primary oil refining continues dropping from 2015. Refining is more sensitive to oil price collapse than production because the margin of Russian refineries is decreasing with the fall of oil prices. Structure of Russian plants by primary oil refining volumes in 2016 76 77 75 73 45 45 42 42 31 32 32 31 20 19 19 19 21 22 19 18 15 15 15 15 39 47 47 48 0 50 100 150 200 250 300 350 2013 2014 2015 2016 mmt Прочие Antipinsky Refinery TAIF TANEKO Mini-refineries Slavneft Bashneft Surgutneftegaz Gazprom neft LUKOIL Rosneft 275 289 283 279 Dynamics of primary oil refining volumes in Russia
- 16. RN Komsomolsk Refinery RN Tuapse Refinery Syzran Refinery Novokuibyshevsk Refinery Kuybyshev Refinery Achinsk Refinery VNK Angarsk NKhK Ryazan Refinery Saratov Refinery 16 Refineries in Russia. Volume of primary refining and annual growth rate by plants in 2016 Rosneft 73,2 mmt 6,2 mmt 9,8 mmt 6,3 mmt 7,1 mmt 6,1 mmt 7 mmt 9,2 mmt 15,3 mmt 5,9 mmt -11% 2% -2% -14% -1 % 12 % 2 % -5 % -4% Bashneft (a Rosneft company from 2016) 18,3 mmt Bashneft Novoil subsidiary Bashneft Ufaneftekhim subsidiary Bashneft UNPZ subsidiary 6,5 mmt 7,8 mmt 4 mmt -1% -19% LUKOIL LUKOIL Volgogradneftepererabotka LUKOIL PNOS LUKOIl UNP LUKOIL Nizhegorodnefteorgsintez 1,1% 12,8 mmt 12,1 mmt 2,85 mmt 14,08 mmt 1,4% 7,7% -19% -4% 41,8 mmt Gazprom neft Gazpromneft Omsk Refinery Gazpromneft Moscow Refinery31,1 mmt 20,5 mmt 10,7 mmt -3% -2% Surgutneftegaz Kirishinefteorgsintez 18,5 mmt -1% 18,5 mmt -1% Gazprom Gazprom dobycha Astrakhan Gazprompererabotka, Surgut ZSK Gazprompererabotka, Urengoy ZPKT Gazprom dobycha Yamburg 2,1 mmt 2,8 mmt 0,3 mmt 0,03 mmt 5,3 mmt -4% -13% 4% 1% -6% -3% -5% -0,1% -2%
- 17. 17 Refineries in Russia. Volume of primary refining and annual growth rate by plants in 2016 Gazprom neftechim Salavat 6,5 mmt Krasnodar Refinery KEN 2,1 mmt TAIF NK 8,3 mmt0,4% 26% -1% ForteInvest -18% Orsknefteorgsintez 4,6 mmt -18% NNK NNK Khabarovsk Refinery 4,7 mmt12% 12% 4,6 mmt 4,7 mmt Slavneft Slavneft YANOS 15 mmt -2%-2% NOVATEK 4% 15 mmt 6,9 mmt «NOVATEK Ust Luga 6,9 mmt 4% Afipsky Refinery Yaysky Refinery Antipinsky Refinery Mariysky Refinery Novoshakhtinsk Refinery TANECO Ilsky Refinery Mini-refineries 6 mmt 4% 2,8 mmt -6% 7,8 mmt -4% 8,7 mmt 1% 1,6 mmt -5% 2,7 mmt 4,4 mmt 39% -6% 9,1 mmt 9% 4% -2% 2% Independent refineries in Russia. Volume of primary refining and annual growth rate by plants in 2016. 41 mmt
- 18. Rosneft 27% Lukoil 18% Gazprom neft 11% Independent refineries 11% Bashneft 9% Surgutneftegaz 9% Slavneft 5% Others 10% Market of main oil products in Russia 18 38,7 38,3 39,2 40 35,5 35,7 35,4 35,1 0 10 20 30 40 50 60 70 80 2013 2014 2015 2016 mmt Internal consumption Production Balance of production and consumption of motor gasoline in Russia 72,0 77,3 76,1 76,3 33,2 31,8 31,1 32,5 0 20 40 60 80 100 120 2013 2014 2015 2016 mmt Internal consumption Production Balance of production and consumption of diesel fuel in Russia Rosneft 26% Lukoil 19%Gazprom neft 18% Bashneft 10% Slavneft 7% Surgutneftegaz 7% Gazprom 6% Others 7% Structure of motor gasoline production in Russia by plants, 2016 incl. 1% - mini- refineries Structure of diesel fuel production in Russia by plants, 2016 incl. 1% - mini- refineries
- 19. 19 Upgrading 41% 20% 15% 6% 6% 35% 17% 11% 9% 2% 24% 63% 74% 84% 93% 0% 20% 40% 60% 80% 100% 120% 2012 2013 2014 2015 2016 Class 5 Class 4 Class 3 and lower Structure of motor gasoline production by ecological classes 66% 48% 34% 17% 15% 9% 11% 8% 10% 0,3% 25% 45% 58% 73% 85% 0% 20% 40% 60% 80% 100% 120% 2012 2013 2014 2015 2016 Class 5 Class 4 Class 3 and lower Structure of diesel fuel production by ecological classes 28,5% 28,1% 28% 27,1% 25,2% 20,3% 19% 21% 23% 25% 27% 29% 2011 2012 2013 2014 2015 2016 Yield of oil residue per 1 tonne of refined feedstock 70,6% 71,1% 71,4% 72,3% 74,2% 79,2% 66% 68% 70% 72% 74% 76% 78% 80% 2011 2012 2013 2014 2015 2016 Oil conversion ratio in Russia
- 20. 0 2 000 4 000 6 000 8 000 10 000 12 000 0 100 200 300 400 500 600 700 800 900 1000 2014 2015 2016 2017 RUB/tRUB/t. Subsoil tax rate Excise tax for gasoline Excise tax for diesel Dynamics of cost of Urals oil and Russian export duty Tax maneuver. Redistribution of tax burden 0 10 20 30 40 50 60 70 80 0 100 200 300 400 500 600 700 800 900 2013 2014 2015 2016 2017 RUB/$s/т Level of prices for URALS crude oil Export tax for crude oil -9% -48% -18% 22% -13% -68% -26% 7% -80% -70% -60% -50% -40% -30% -20% -10% 0% 10% 20% 30% 2013 2014 2015 2016 2017 Growth rate of URALS crude oil prices Growth rate of export tax for crude oil 2013 2014 2015 2016 2017 Limit oil export tax rate 60% 59% 42% 42% 30% Dynamics of subsoil tax and excise tax on motor fuels Main characteristics of Tax Maneuver Reduction in rates of export custom duties for crude oil and oil products Increase in the base rate of subsoil tax for commercialoil Reduction in excise taxes for motor fuels to prevent sharp rise in prices (in the context of subsoil tax increase) Goal of the maneuver is to reduce the budget dependence on the oil prices and mitigate the effect of their fall for the oil industry Rates of subsoil tax on the left axis 21,0 21,5 22,0 22,5 23,0 23,5 24,0 24,5 25,0 25,5 2014 2015 2016 KRUB/t Motor gasoline, average price of domestic market Diesel fuel, average price of domestic market Average price for motor fuels on the Russian domestic market Russian average export price for motor fuels 0 100 200 300 400 500 600 700 2014 2015 2016 $/t Motor gasoline, average export price Diesel fuel, average export price