Refining

Rosneft owns and operates seven major refineries in Russia: the Tuapse refinery on the Black Sea coast, the Komsomolsk refinery in the Russian Far, the Kuibyshev, Novokuibyshevsk, and Syzran refineries in the Volga-Urals region, and the Achinsk and Angarsk refineries in Eastern Siberia (the later five refineries were acquired by Rosneft in 2007, which allowed the Company to considerably enhance its vertical integration). The total primary capacity of Rosneft refineries is 391 mln barrels of crude oil per year, which is a record high for the Russian petroleum industry and represents 49% of Company production volumes in 2009.

Rosneft also owns four mini-refineries (in Western Siberia, Eastern Siberia, Timan-Pechora and the southern part of European Russia) as well as a 50% stake in the Strezhevskoy mini-refinery in Western Siberia. Total annual capacity of mini-refineries is 4.4 mln barrels of crude oil.

Favorable refinery locations ensure Rosneft’s successful petroleum product marketing both domestically and abroad. Moreover, the Company-owned terminals in Tuapse and Nakhodka enable Rosneft to capture much higher margins on petroleum product exports to Europe and the lucrative Asian market.

Company refineries, including mini-refineries, processed 364.5 mln barrels of oil in 2009, which is 1.1% more than in 2008. The growth resulted from throughput increase at the Achinsk and Kuibyshev refineries. Utilization of refining capacity exceeded 90% and light product yield was 57.3%. Overall output of petroleum products rose to 47.1 mln tonnes, including outputs from the Angarsk Polymer Plant and the Novokuibyshevsk oils and additives plant.

Following successful integration of refining capacity acquired in 2007, Rosneft has focused on refinery modernization and efficiency improvements. The aim in many such projects is to ensure compliance with Russian technical regulations defining main standards for petroleum products which were introduced at the start of 2008 and fix precise deadlines for changeover to Euro-3, Euro-4 and Euro-5 standards for motor fuels.

Implementation of refinery modernization programs continued in 2009, both through reconstruction of existing processing units and construction of new ones. Equipment that is being rebuilt or newly installed includes: reforming, isomerisation and alkylation units for production of high-octane gasoline components; catalytic cracking units for production of high-quality gasoline components and for increase of refining depth; hydrocracking units for production of high-quality diesel and jet fuel components, and for increase of refining depth; and hydrotreatment units (to ensure that requirements of the new Russian technical regulations on sulphur content in products are met).

The first of these units were commissioned in 2009 and will increase Company output of fuels to Euro-3 and Euro-4 standards in 2010.

Work continued in 2009 on capacity enlargement at the Tuapse refinery. A total of USD 635 mln was spent in 2009 to finance investments at Company refineries, which is 21% more than in 2008.

Refinery throughput and petroleum product output

1 Refining of crude oil produced by the Company and of purchased crude oil at owned and third-party refineries (including mini-refineries) and corresponding output of petroleum products (including petrochemicals produced at Angarsk polymer plant in 2007-2008).