Ust Luga OJSC, developer of Russia's Baltic port of Ust-Luga, is in talks with potential investors to build a deep conversion refinery and natural gas processing complex, with the potential investors already conducting pre-FEED studies, a spokeswoman for the developer said Friday.
Deep conversion facilities transform a wide variety of hydrocarbons, including lower quality ones, into the higher value products, like diesel, gasoline and petrochemicals.
Such plants typically contain coker and hydrotreater, and hydrocracking units.
"We have signed memorandums with several potential investors, who are currently conducting the preliminary front-end engineering and design studies for the project," the spokeswoman said, declining to name the companies involved.
Gennady Timchenko is a co-owner of Swiss energy trader Gunvor, which partly owns the Ust-Luga crude terminal. A spokesman for Gennady Timchenko said it is not considering investing in the project.
A spokesman for Russia's largest petrochemical company Sibur said the company was not interested in the planned facility.
"We have only one project in the [Ust-Luga] port, which is construction of a complex for transshipment of LPG and light oil products," the Sibur spokesman said.
A spokesman for Russian gas independent Novatek, which is building a gas condensate facility in Ust-Luga, said he had not heard about the new project.
The timeframe for construction of the facility, its costs and the projected capacity will depend on the outcome of the pre-FEED studies, the Ust-Luga spokeswoman said, adding that under preliminary projections, the plant could be launched by 2020.
"Construction of the facility is part of the comprehensive plan to build an industrial zone near the port, we expect the whole project to be completed by 2030, with the launch of the deep conversion plant currently planned by 2020," the spokeswoman said.
Preliminary costs of the facility may reach up to $10 billion, Russian news agency Prime said late Thursday, quoting the developer.
"We currently do not reveal details of the marketing process, but considering the fact that the plant is to be located close to the Ust-Luga port, it is well positioned to offer products for exports," the spokeswoman said.
According to the developer's website, the Ust-Luga port currently has eight operating terminals, including the 38 million mt/year (760,000 b/d) crude export terminal, which was launched in March.
The Ust-Luga crude terminal is the final point of the Baltic Pipeline System-2, known by its Russian acronym BTS-2, which gives Russian crude oil a new export outlet.
The 1,000-km BTS-2 pipeline carries around 30 million mt/year of crude to European markets, with the capacity likely to increase to 38 million mt/year at a later stage.
Novatek expects to launch the first 3 million mt/year stage of its stable gas condensate terminal in Ust-Luga in the fourth quarter of the year, the company's spokesman said, adding that the second stage with the same capacity is planned to come online in the fourth quarter of 2015.
In the first half of 2013, Sibur is expected to launch its LPG and light oil products terminal with an annual export capacity of 1.5 million mt of LPG and 2.5 million mt of light oil products, according to the company's spokesman.
