Western sanctions set to hamper Russia's refinery upgrades

A multi-year upgrade of Russia's refineries -- heavily reliant on Western technology to produce more valuable products, such as diesel and gasoline -- will come under severe pressure from sanctions being announced by the EU and US.

The US said March 2 it was imposing export controls on technology that could be used by Russia to modernize its refineries, as penalties are ramped up against Moscow for its invasion of Ukraine.

The latest move by the US included a measure to extend all export controls on Russia to also cover Belarus, whose two refineries are preparing to launch new units this year.

Last week, EU energy sanctions also aimed hampering upgrades to Russia's refining sector were given preliminary approval by by member states.

The measures unveiled by European Commission President Ursula von der Leyen were part of a broader package encompassing banking and aviation aimed at holding Russia "accountable" for its actions in Ukraine, she said.

EU energy commissioner Kadri Simson told the Industry Committee of the European Parliament March 3 that the ban on export of specific refining technologies "will make it harder and more costly for Russia to upgrade its oil refineries".

"These technologies are built in Europe and they cannot be easily replaced globally by other suppliers," Simson said.

Russian refineries have completed the first phase of their modernization, which started in 2007 and has led to the replacement of outdated equipment from Soviet times.

Currently, they are implementing a number of projects aimed at increasing their complexity and further reducing fuel oil output while increasing gasoline and distillates yields.

While initially only the big refineries, belonging to oil majors were undergoing modernization, more recently medium-sized independently-owned refineries have started their own upgrades.

Previous sanctions on Russia led to delays in some of the projects, although Russia strove to replace some of the imported equipment with home-made kit.

However, most projects still rely on imported technology.

Main upgrade projects in Russia, Belarus:

** Syzran is building an FCC complex.

** Afipsky is working on a hydrocracking unit.

** Omsk is upgrading a catalytic cracker and primary CDU-VDU processing complex, which will replace six outdated units.

** Ryazan is building a hydrocracker complex.

** Komsomolsk is constructing a hydrocracker and hydrotreater.

** Moscow refinery is building a deep processing complex, including delayed coker, hydrogen and hydrocracker units.

** Perm is building a catalytic cracker complex.

** Novoshakhtinsky has started the construction of a gasoline complex.

** Yaisky refinery is building a delayed coker.

** Orsk is building a delayed coker complex.

** Angarsk is building catalytic cracker complex.

** Nizhny Novgorod is completing the construction of a deep processing complex.

** Yanos refinery in Yaroslavl is building a delayed coker complex.

** Achinsk is building a hydrocracker.

** Ilsky is building a new gasoline complex.

** Tuapse is building a hydrocracker.

** Novokuybishev is building a hydrocracker.

** Naftan in Belarus is due to launch a delayed coker.

** Belarus Mozyr is testing a new hydorcracker.