Recovering Diesel Exports from FSU are Bad News for Europe’s Refiners

2017-04-21

Recovering Diesel Exports from FSU are Bad News for Europe’s Refiners

The year 2017 will be a comeback year for diesel exports from both Russia and Belarus, according to ESAI Energy’s newly published CIS Watch One-Year Outlook. Last year, both countries decreased production and exports in the face of a weak diesel market. This trend will reverse in 2017 as the diesel market regains its footing, and higher inflows of diesel from the FSU into Europe will reduce the need for product from Europe’s merchant refiners. But the influx of diesel into Europe also limits the scope for a more robust recovery of diesel spreads.

The CIS Watch report explains why diesel exports will recover in the two countries. In Russia, higher crude processing rates and greater upgrading capacity are enabling Russia to produce more diesel this year. Recently, reduced Russian crude deliveries to Belarus have undermined the latter country’s diesel supply and exports. That is about to change though, as the normalization of Russian crude deliveries is unshackling Belarusian refineries. The two countries’ combined diesel exports, which fell 80,000 b/d last year, will increase by 25,000 b/d this year. The completion of the new hydrocracker at Rosneft’s Tuapse refinery later this year means exports will continue their expansion in 2018.

“Refiners who invested in diesel are counting on improved profitability from the fuel,” points out Andrew Reed at ESAI Energy. “But widespread investment in diesel left the market vulnerable in 2016 when demand stumbled, and will result in a more gradual recovery of diesel spreads to crude until IMO regulations create greater demand.”

Source: ESAI Energy

Source from : Oil & Companies News

HEADLINES