Rising Production of Heavy Crude

The problems with Urals Blend quality are not just down to Espo, however. Rising production
of heavy crude from the republics of Bashkortostan and Tatarstan has also had an impact, as has
the failure to make any progress on establishing a crude quality bank system for Russian crude.
Regional producer Bashneft has increased production significantly over the past two years, and is now
pumping some 291,000 b/d of heavy oil into the Transneft system. In addition, delays to the start-up of
Tatneft’s 140,000 b/d Nizhnekamsk refinery, designed to process heavy crude from Bashneft and Tatneft,
has meant more of their volumes have found their way into the Transneft network. The long-discussed
quality bank system envisaged heavy, sour crude from Tatarstan and Bashkortostan being refined locally
rather than shipped for export via the Transneft system. But the idea has been opposed by Tatneft and
Bashneft, who argue they should be compensated for having no export outlet.