Bitumen road

Russian Bitumen Production up 21% in 1H 2018

By Elizaveta Semenova In Bitumen November 1, 2018

Bitumen is the principal material used for road construction. Close to 95% of all “paved” roads in the world are estimated to have bituminous surfacing.

As per analytical data published by CREON Energy, bitumen production in Russia reached 5.92 million MT in 2017, 10.3% higher than the year before. For the first 6 months of 2018, the total production of bitumen is already 21% higher than in the corresponding period of the previous year. The total volume of production in 2018 could therefore reach 6.9 million MT, the highest result of the last 5 years. The main producers of bitumen in Russia are Rosneft, Gazpromneft, and Lukoil.

Bitumen production in Russia

  • mln Mt

This increase in the volumes of bitumen production is principally due to substantial expansion of internal road construction in the last years. At the same time, a window for export supplies still exists.

In addition, the growth rate of polymer-modified bitumen (PMB) production is more than 10% each year. According to analytical data, this volume should exceed 5% of the total bitumen volume by the end of 2018. Due to its high quality, this product is largely exported in big bags, and the main country of export is currently Chile.

PMB production in Russia

  • ths Mt

In August 2018, the Russian government decided to complete a so-called “tax maneuver,” meaning that the export duties for oil and heavy petroleum products will gradually decline to 0% by 2024. This will have a big impact on bitumen markets, and the current export duty for bitumen (Oct. 2018) is set to 137.50 USD/Mt. The first decrease of export duty at 20% will start on 01.01.2019, with a corresponding decrease every year until 0% is reached in 2024.

Export duty reductions may thus lead to more attractive export prices for bitumen, along with growing volumes of production.

In addition, PMB and other bitumen products (specialties for road construction like polymer bitumen joint tapes, mastics, and sealants etc) already have 0% export duty.

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