* Transneft to adjust crude oil pipelines to carry diesel
* Pipeline capacity to Primorsk seen rising to 23 mln T in
(Adds detail, quotes, trader comments)
By Vladimir Soldatkin
MOSCOW, March 6 Russia's oil pipeline monopoly
Transneft said on Thursday it plans to nearly triple
diesel exports from the Baltic Sea port of Primorsk after 2016,
when domestic companies are expected to boost production.
Transneft said in an email that pipeline capacity for ULSD
diesel destined to Primorsk would total 23 million tonnes a year
(470,000 barrel per day) after 2016, up from over 8 million
As there will be not enough pipeline capacity to export the
production then, Transneft said it will adjust one of the crude
oil links leading to Primorsk to allow it to move ULSD.
It would use the crude pipelines of the Baltic Pipeline
System (BTS) to ship ULSD to Primorsk. BTS-1 runs two parallel
pipelines to Primorsk.
Transneft, which is also the main shareholder in Primorsk
port, said that one of the pipelines of a smaller volume would
be used for ULSD.
The sharp increase in ultra low sulphur diesel (ULSD)
exports is bad news for Europe's refining sector that has seen
profits hammered over the past year due to increasing imports of
the motor fuel from Russia, the U.S. Gulf Coast and Asia.
Traders have said that increasing exports of diesel to
Primorsk would lead to drying up of flows to other destinations,
such as the Baltic port of Ust-Luga or Latvia's Ventspils.
"The new pipeline makes sense as all the dirty (heavy oil
products) loading is going through Ust Luga now. This will take
pressure off the idea of switching Ventspils to ULSD and at the
same time keeps the business with Mother Russia," a trader said.
Russia has been decreasing crude oil exports as it
modernises its oil refineries with a view to boosting high
quality fuel to satisfy the demand of rising numbers of cars,
and to stick to environmental standards.
The result of ensuring that motorists have enough premium
gasoline to fuel Russia's growing fleet of Western-made cars
will be a diesel surplus that could reach 65 million tonnes a
year by 2020, Moscow's Skolkovo business school estimates.
Transneft would start works to transport ULSD from the
Kirishi refinery, owned by Surgutneftegas, to Primorsk
later this spring and the pipeline would be ready to ship the
fuel next autumn or winter.
Another part of the plan to expand the capacity of oil
products pipelines is to transform crude oil pipeline from
Yaroslavl to Kirishi into a diesel link in 2016.
(Reporting by Vladimir Soldatkin; additional reporting by Ron
Busso in London, editing by Gabriela Baczynska and William