Transneft Chief: Build More Refineries, Export Less Crude

Russia should cut exports of crude oil, probably by as much as 50 percent, and build new refineries and petrochemical plants to boost exports of finished products, the country's oil export chief said in an interview.

Semyon Vainshtok, head of pipeline monopoly Transneft, said he would like the country to build refineries on the Baltic Sea and the Pacific as well as expand and probably build new ones on the Black Sea.

"I want crude exports to be cut by 50 percent because crude export is a sign of an undeveloped state. We need to develop oil and chemical refining so added value stays in Russia," said Vainshtok, who oversees 90 percent of Russian crude exports.

"From the point of view of Transneft it won't be profitable, but from the point of view of the state it must be like that.

"Look at how many refineries are being built in China, Kazakhstan. I don't know why we are behind them."

Russia, the world's largest oil exporter after Saudi Arabia, produces around 9.5 million barrels per day and exports around 5 million bpd of crude oil and 100 million tons of refined products.

Oil majors have boosted refining runs by over 10 percent in 2005 to above 4 million bpd amid record high crude export duties and much lower duties on refined products.

Vainshtok said new refineries should be built in the Baltic Sea port of Primorsk, Russia's largest crude export outlet, as well as in the Far East, at the terminus of Russia's planned first major pipeline to Asia.

A plant in the southern Black Sea port of Tuapse should be also expanded, he said. "I think they should have a minimal capacity of 20 million tons each. We don't see ourselves in these projects. The plants could be built by a consortium, and we are ready to guarantee equal pipeline access to them," he said.

Russian oil production grew by a mere 2.7 percent in 2005 to 9.44 million bpd, down from 9 percent growth in 2004 and a record 11 percent in 2003.