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. Last Updated: 07/27/2016

$35M Fuel Ring Half-Finished

The Central Fuel Co. has passed the halfway point in its $35-million plan to streamline fuel deliveries to gas stations by circling the city with strategically located pumping stations linked to the city’s main oil refinery.

CFC last week completed the fifth of a planned nine such mega-terminals in the project, which runs alongside a 390-kilometer Soviet-era circular pipeline and intersects with the city’s major thoroughfares. Each terminal will have the capacity to dispense 67,000 tons of fuel a year.

Located an average distance from the capital of about 41 kilometers, the pipeline ring is linked to the Moscow Oil Refinery, which provides roughly 60 percent of the capital’s fuel. The strategic location of the pumping stations will halve the average distance an oil truck needs to travel between refinery and retail outlet to 30 kilometers and lower the average cost per ton to 130 rubles from the current 205 rubles, CFC says.

When completed the project — dubbed Moskovskoye Koltso, or Moscow Ring — will also make it easier to monitor petrol quality, CFC officials say. Over a quarter of all gasoline sold in the capital is "bootleg fuel," or inferior fuel that has been tampered with to boost its octane level, according to the Moscow Fuel Association.

The Moscow Ring was created three years ago as a result of an agreement between the Fuel and Energy Ministry, Moscow and the Moscow region administration.

CFC is contributing $17 million and Britain-based Oxoil LTD $18 million. In exchange, Oxoil received 51 percent plus one share in PARKoil, the CFC subsidiary running the project. The project is expected to be profitable by 2003, its organizers say.

The project is also likely to strengthen CFC’s position on the retail gasoline market, where it currently has 84 gas stations, with roughly the same number in the region. Its major competitor, top oil producer LUKoil, has a combined 50 stations in the region and city, with plans to open 164 more in the region by 2004. Moscow has a total of 750 stations, of which independent traders control two thirds.

In a separate project, LUKoil plans to complete six of its own ring stations by the middle of 2001 as part of an agreement with the Moscow region.