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  • Country report

    Russian NGLs – sustaining liquids production in the 2020s

    • 06 July 2017

    A report summarising Wood Mackenzie's coverage and outlook for NGLs in Russia.

    $6,750.00

    Summary

    A slide pack summarising Wood Mackenzie's coverage and outlook for NGLs in Russia is available from the downloads section.

    What's included

    • Document

      NGLs Russia 2017.xls

      XLS 246.00 KB

    • Document

      Russian NGLs - sustaining liquids production in the 2020s.pdf

      PDF 1.17 MB

    • Document

      Russian NGLs – sustaining liquids production in the 2020s

      ZIP 1.15 MB

  • Company report

    LUKOIL refining and oil products summary

    • 13 June 2017

    LUKOIL is optimising its European downstream operations to better align refinery production with fuels marketing sales

    $1,050.00

    Summary

    Strengths Weaknesses Strong market positions in Finland Bulgaria and Romania Leaner fuels marketing network in Europe Successful entry into the high growth Turkish market Strong financial performance in downstream segment Large refined product surplus in Russia leaves it highly exposed to the fiscal economics of product exports Small marketing business associated with the ISAB refinery in Italy necessitating large product exports Opportunities Threats Leverage the investments recently completed at its Russian refineries to export refined products that fully conform to European quality standards Refinery ownership interests in the Netherlands and Sicily facilitate strong trading positions in both the ARA and Mediterranean regions Use the ISAB Priolo refinery to build a marketing presence in Sicily and/or mainland Italy Build Akpet its acquired Turkish marketing affiliate to expand downstream presence in Turkey acquire further storage and logistics assets to facilitate product imports into the country from the ISAB Priolo refinery and the Black Sea area Further changes to the Russian export "tax manoeuvre" could have a negative impact on refining and marketing margins Competition in Mediterranean markets from export refiners in the Middle East Challenges of placing surplus Med production Loss of right to use Omisalj storage facilities leaves LUKOIL without its important supply hub for Croatia and could lead to further loss of market share and even possible exit Competition from Rosneft which has strengthened its position in Turkey with an agreement to double oil product supplies A leading independent energy company in Russia Although the Russian state progressively divested its direct shareholding in LUKOIL from over 90% at the time of the company's formation in 1993 to zero by 2004 (following the sale of its remaining 7.6% stake to ConocoPhillips) LUKOIL has nevertheless maintained a seemingly close alignment with the interests of the Kremlin all main strategic initiatives are outwardly consistent with the energy policies being pursued by the government. Although this has allowed LUKOIL to remain largely immune to any negative interference from the state it seems that the company struggles to compete with Rosneft and Gazprom in gaining access to high impact domestic exploration opportunities such as the offshore Arctic. In the wake of the state's divestment of its former ownership interest in LUKOIL ConocoPhillips went on to build its shareholding in the company to as much as 20% by 2006. For LUKOIL the partnership provided additional credibility with investors and brought technical and management experience in both upstream and downstream. The partnership also opened up downstream opportunities for LUKOIL outside Russia as demonstrated by the purchase of the ConocoPhillips Jet' branded retail service station assets across Europe. ConocoPhillips subsequently divested its entire shareholding in LUKOIL in 2011. Became one of the major European fuels marketing players through acquisition LUKOIL presented a ten year strategy plan in 2006 focused on growth anticipating a major increase in capital expenditure. LUKOIL wanted to sustain its leading position within the Russian oil industry in terms of oil production as well as to become a more balanced integrated oil and gas major with a broader international presence. To that end up to US$34 billion of capital investment was planned over the ten year period to 2016 for the acquisition of both upstream and downstream assets. In downstream a key thrust of this strategy was to increase refining capacity so as to achieve a closer balance between oil production and refining and it was largely as a result of this that LUKOIL acquired stakes in two Western European refineries in 2008/9: a 49% stake in the ISAB Priolo refinery in Sicily which was subsequently increased to 100% and a 45% shareholding in the Vlissingen refinery in the Netherlands majority owned by Total. These refinery acquisitions followed a period of strong acquisitive growth in fuels marketing in Europe which had seen not only the Jet' retail service station acquisitions from ConocoPhillips but also LUKOIL's market entry into the high growth Turkish downstream sector through its acquisition of leading independent local distributor Akpet. These moves complemented efforts to build its fuels marketing presence in the Balkans within the supply areas of its Romanian and Bulgarian refineries. In October 2016 the company's president announced that LUKOIL is in the process of putting together a new 10 year strategy plan in light of new market and political developments. The new plan will be announced in 2017. Company focus has shifted to optimising European downstream assets More recently there has been a change in strategic focus away from growth by acquisition towards organic expansion in upstream and on improving the efficiency of existing assets in downstream. In general the downstream focus has been on LUKOIL's Russian market where it has invested in upgrading its refineries to facilitate the production of fuels to European quality standards. Its major investments in refining outside of Russia in recent years have been theUS$1.5 billion hydrocracker project at the Neftochim Burgas refinery in Bulgaria and the US$1.2 billion purchase of the final 20% stake in the ISAB refinery that LUKOIL had to acquire as part of the put option initially agreed on with ERG. ISAB became 100% owned by LUKOIL at the end of 2013. The Odessa refinery asset was divested in 2013. In December 2014 LUKOIL concluded a number of deals aimed at optimising its European portfolio of downstream assets. The marketing business in Czech Republic was divested to MOL and those in Hungary and Slovakia were sold to Norm Benzinkút. In total around 120 service stations were sold the majority (76) being in Hungary. Within the Czech and Slovak markets in particular LUKOIL had failed to build critical market mass and with no equity refinery supply the divestment made strategic sense. In June 2015 LUKOIL divested its Estonian fuels marketing business. In addition the company sold its Ukrainian marketing and distribution business including 240 service stations to Austrian company AMIC Energy. At the beginning of 2016 AMIC Energy also agreed to buy LUKOIL's business in Latvia Lithuania and Poland. Finally in November 2016 LUKOIL disposed of 31 service stations in Cyprus selling them to Greece's Motor Oil. Between 2013 and 2015 the company made a number ofsmall investments in marketing assets in Luxembourg and Netherlands in line with its strategy to enhance integration of retail channels with refining. Russian product exports remain a key driver LUKOIL retains a large structural refined product surplus in Russia as a result of which it relies on substantial exports of primarily gas/diesel oil through northern Russia and the Baltic into Europe and beyond. Its trading organisation LITASCO plays a key role in this activity placing products manufactured in Russia into export markets as well as trading out product surpluses at its European refineries especially ISAB Priolo and Vlissingen. In joint venture with Spain's Meroil LITASCO commissioned new storage tanks at the Barcelona terminal in 2012 to facilitate product exports from ISAB refinery to the large Spanish market and potentially to Africa. In 2012 the company also completed the expansion of another joint venture facility Service Terminal Rotterdam (STR) strengthening its position in ARA's growing bunker fuels market. Several news sources reported at the end of 2016 that LUKOIL has lost its rights to use Omisalj storage facilities which could result in the company leaving Croatian market.

    What's included

    • Document

      LUKOIL refining and oil products summary

      PDF 947.29 KB

  • Insight

    European refinery closure threat index - delaying the inevitable?

    • 12 June 2017

    The refining environment in Europe has improved in recent years but what does this mean for individual assets and which are most at risk?

    $900.00

    Summary

    What's included

    • Document

      European refinery closure threat index - delaying the inevitable?

      PDF 867.80 KB

  • Insight

    Downstream M&A: as majors retreat, who is buying fuels marketing assets in Europe?

    • 01 March 2016

    In 2015 the majors continued to selectively retreat from European fuels marketing, as specialist downstream independents emerge as buyers

    $900.00

    Summary

    What's included

    • Document

      Downstream M&A: as majors retreat, who is buying fuels marketing assets in Europe?

      PDF 578.65 KB

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