Petroleum Products Transportation

Petroleum products turnover kept growing in 2018, although the growth rate somewhat slowed down to 7.3% in the reporting year, as against 8.1% in 2017. Exports of petroleum products remained the main driver, with the growth rate doubling the rate of growth on the domestic market (21.7% versus 10.4) in 2018.

The increase in exports of petroleum products is associated with the launch of the Yug project for diesel fuel transportation towards the port of Novorossiysk and an increase in the volume of transportation towards the port of Primorsk. Due to the higher-than-anticipated growth, the share of exports in the delivery of petroleum products to the Group’s pipeline network continued to increase in 2018 and achieved 73% against 71% in the preceding year.

In order to facilitate further growth of petroleum products turnover, the Company is implementing a number of investment projects in accordance with the Long-Term Development Programme. In 2017, the Yug investment project Phase I is the revamping of the Tikhoretsk — Novorossiysk trunk pipeline; Phase II is the construction of the Volgograd — Tikhoretsk petroleum products trunk pipeline (PPTP). was implemented; in 2018, such investment projects were completed as “Reconstruction of trunk pipelines to increase the petroleum products transportation volume to the Moscow region” and “Development of the trunk pipeline system to increase the supply of petroleum products to the port of Primorsk up to 25 million tonnes per year («Sever 25»)".

Oil transportation volume and specific transportation costs
Breakdown of petroleum products deliveries to consignees (%)

The 2018 increase in the Company’s share in the Russian petroleum products transportation market to 30% was attributable to the following measures implemented:

  • expansion of the infrastructure to ensure sufficient technical capability for transportation of the petroleum products volumes declared by shippers;
  • formation of tariffs for petroleum products transportation to ensure competitiveness of the petroleum products pipelines in the transportation services market;
  • comprehensive revamping of tank vehicle loading stations.

A number of tasks is planned to be addressed in 2019 in order to further increase the Company’s share in the petroleum products transportation market, including:

  • acceptance of additional volumes of petroleum products from refineries connected to the PPTP system, taking into account the increase in production as a result of their revamping;
  • bringing in additional volumes of petroleum products for transportation using combined schemes with both rail and pipeline transport involved.
Petroleum products transportation and turnover in the petroleum products trunk pipeline system
Operation Name 2016 2017 2018 Change, 2018 vs 2017
Petroleum products delivery, total (million tonnes) 33.1 33.1 39.2 +18.4%
including:
for export 23.8 23.5 28.6 +21.7%
to the domestic market of the Russian Federation 9.3 9.6 10.6 +10.4%
Turnover (billion tkm) 45.4 49.1 52.7 +7.3%
Petroleum products transportation via the petroleum products trunk pipeline system in 2018-2019 (million tonnes)
Operation Name 2018 (target) 2018 (actual delivery) 2019 (target)
Petroleum products transportation 37.5 39.2 40.3
including:
for export 27.7 28.6 28.6
to the domestic market of the Russian Federation 9.8 10.6 11.7