18 Aug 2022 14:48

Russia needs oil, petroleum product reservoirs with capacity of 140 mln tonnes amid sanctions pressure - experts

MOSCOW. Aug 18 (Interfax) - Creation of strategic reservoirs for liquid hydrocarbon storage should be a task for state energy policy amid changed conditions of trade relations between countries, experts of the Union of Oil and Gas Producers of Russia and CDU TEK have said in an article published in the "Gas Industry" journal.

"As of today, it is necessary, based on Soviet and world experience, to consider the possibility of creating oil reservoirs with a volume of about 140 million tons and similar ones for petroleum products. In terms of organization and technologically, this should be a distributed system tied to transport infrastructure and using the method of storage in rock salt deposits," the article reads. Among its authors are Gennady Shmal, head of the Union of Oil and Gas Producers, and Rishat Shagislamov, project director of the Department of Oil, Gas, Coal and Peat Production and Transportation at CDU TEK.

Now, with a number of foreign companies refusing to buy Russian oil, "the absence of a system of liquid hydrocarbon storage facilities seems to be a serious strategic omission of the domestic oil and gas complex," the article says. The existence of a strategic oil reserves, according to the authors, "allows for strengthening the country's geopolitical position and resisting such pressure."

The experts suggest building strategic tank parks in the Perm Territory, Kalmykia, the Far East and the Volga Region using enterprises with state participation and involving investors from among the largest domestic energy companies. In their opinion, this model will allow to react flexibly to possible problems, including the need to incur large capital expenses with long payback periods.

The reservoirs to be created could be divided into state strategic oil reserves and storage capacity which would be used for commercial purposes to work with traders.

"The system should provide for the distribution of capacity between the port zones of the main export vectors, with an emphasis on the eastern direction, and the zones of the main volumes of processing and production of various oil products in order to balance the operation of oil and gas processing and oil and gas chemical complexes," the authors of the article also said.

A proposal to create underground oil storage facilities was actively discussed in 2020, when coronavirus-related restrictions led to a decline in demand and a drop in oil prices. The discussion took a new turn in March 2022, amid a boycott of Russian crude. Earlier, experts of the Russian Gas Society (RGS) stated that the optimal volume of reserve is 10-20% of annual production [about 55-100 million tonnes based on oil production in 2019]. According to their estimates, it takes 10-12 years to create such storage from scratch, but if this is done on the basis of depleted fields, it is possible to meet the deadline in 3-5 years.