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Russian Storage Modest in Relation to Output

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Storage is a hot topic these days as the oil industry scrambles to find somewhere to stash barrels that the world no longer needs. That's certainly true of Russia, which has recently been producing more than 11 million barrels per day but agreed to cut its output by 2.5 million b/d under the latest Opec-plus deal. The country's storage capacity is shrouded in mystery. Estimates of available capacity vary from just over 70 million-110 million barrels, but much of that is for refined products, which cannot be stored for long periods like crude oil. There is a dedicated federal agency, Rosreserv, which is responsible for managing Russia's emergency petroleum stockpile. But the volumes it looks after are a closely guarded state secret. Transneft, which maintains the nation's network of crude oil and refined product pipelines, reported storage capacity of about 150 million bbl in its annual report for 2018. However, that figure includes the capacity of the 70,000 kilometer pipeline system, as well as true storage facilities at various points along that system. Energy Intelligence calculations based on Transneft data indicate that Russia's four key marine export outlets -- the Baltic Sea ports of Primorsk and Ust-Luga, the Black Sea port of Novorossiysk and Kozmino on the Sea of Okhotsk -- have storage facilities that can store a combined total of up to 20 million bbl of crude oil. But Transneft says these facilities are in constant use as part of the export process and can't be used to store oil for an extended period of time. Transneft is supposed to ensure that it has enough crude and products in storage to keep things running smoothly for up to 72 hours in case of planned maintenance or emergencies. In the summer, the port storage facilities tend to be less full because better weather allows the ports to operate with few disruptions. But in late fall or winter, they are usually quite full because bad weather can halt loadings. In addition to ensuring steady operations, Transneft needs the crude storage facilities to ensure consistency in deliveries to refineries and to maintain crude quality parameters, both for exports and supplies to domestic refineries. Russian oil companies also have their own storage facilities at production sites and refineries, but these are difficult to quantify. Some estimate that they amount to about 110 million bbl of capacity, but that only about a third of this is true storage capacity, with the rest generally used in day-to-day operations. Companies that are unable to store large volumes of crude oil would have to cut back production faster. But shutting in wells in a cold climate is tricky because they might freeze up, which could make it harder for Russia to cut its crude output in line with its commitment to Opec-plus. Nadezhda Sladkova, Moscow

Topic:
Oil Pipelines
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