RusEnergy

YUZHNO-SAKHALINSK, March 21 (RIA Novosti) - Russia's Rosneft has decided to construct an oil refinery near the Far Eastern port of Nakhodka, the state-run oil company's head said on Friday. A declaration of intent on the project, which is predicted to have an annual capacity of up to 20 million metric tons, has been signed following ministerial approval. "A contractor - company Akseks - was picked in a tender, that drew up a project feasibility study and determined a construction site," Sergei Bogdanchikov told a news conference. He said that out of seven sites under consideration, one located on the coast of the Sea of Japan 15 kilometers from Nakhodka, met all the criteria. "According to the draft feasibility study, the venture will produce petrochemicals [not gasoline or diesel], given that there are sufficient gasoline and diesel production enterprises in the regions as well as potential consumers," Bogdanchikov said. He referred to a plant in Japan, with a capacity of 200 million tons, a 100-million-ton facility in South Korea and China's development in the sector. "Therefore, the outlook for petrochemical products is that demand will rise." Rosneft's policy is to reduce the volume of crude exports and to increase the volume of oil products with high added value. Bogdanchikov said that the feasibility study will be finalized and an investment decision made, once governmental ministries and departments have considered the project. Nakhodka is the terminus of the East Siberia-Pacific Ocean pipeline project, designed to pump up to 1.6 million barrels of crude per day from Siberia to Russia's Far East and then on to energy-hungry China and Asia-Pacific markets. The company intends to invest $1 billion in the reconstruction of an oil refinery in Komsomolsk-on-Amur, also in Russia's Far East, between 2008 and 2012. The company's head said that under new regulations in Russia, diesel fuel and gasoline must meet Euro 3 emission standards from 2009, Euro 4 from 2010 and Euro 5 from 2012. "I can assure you that diesel fuel produced by the Komsomolsk plant already meets Euro 5 standards and is sufficient to meet Far Eastern demand," Bogdanchikov said. He said Rosneft is planning to set up sales departments in a number of regions in Siberia, which he said was a natural outcome of rising production. "We produced some 101 million tons last year and we expect around 112 million tons this year," he said. The company's development strategy envisions output of 130 million tons of oil in 2010, as much as 160 million tons in 2015 and 170 million tons in 2020. Siberia and the Far East will account for 70% of production growth.