The recent transfer of Russian oil assets in South-East Europe has significantly transformed the control and operation of refineries, resulting in a reevaluation of the pricing and availability of key by-products such as petroleum coke (petcoke) and bitumen. These by-products, crucial for construction and industrial activities, are now being treated as commodities subject to global market dynamics rather than merely local supply necessities. This shift is poised to have substantial implications for infrastructure costs and public investment across the region.
Historically, by-products from refineries were subsidized within vertically integrated systems, where profits from fuel sales allowed for stable pricing of petcoke and bitumen. However, with new ownership models emerging—characterized by European energy firms and global trading houses—this cross-subsidization is fading. By-products are now seen as monetizable assets that can be sold at competitive global prices, thus increasing their market value.
In South-East Europe, medium-to-large refineries typically generate between 5% and 10% of their output as secondary products like petcoke and bitumen. While these figures may seem minor compared to fuel production, their economic significance is substantial. For instance, petcoke serves as a vital input for cement manufacturing while bitumen is essential for road construction and civil engineering projects. Previously, local refineries acted as suppliers of last resort, ensuring price stability through domestic sourcing.
The transition to European control has led to a marked increase in prices for these by-products. Specifically, the price of petcoke is expected to rise between €30–50 per tonne from 2022 to 2025 due to heightened international demand from cement producers in Asia and the Middle East. This escalation translates into increased operational costs for cement plants in South-East Europe that previously benefited from near-cost pricing.
Bitumen pricing has also undergone significant changes since the ownership transitions began. Previously lagging behind international benchmarks, bitumen prices have surged by 20–35% in import-dependent markets. This increase can elevate total costs for highway construction projects by 5–9%, placing additional strain on government budgets already tasked with multi-year infrastructure programs. A national road initiative valued at €1 billion may incur unplanned cost overruns ranging from €50–90 million solely due to rising bitumen prices.
The pressures on cement producers are compounded further by rising energy costs and carbon-related expenses, leading to an overall increase in operational expenditures of €4–7 per tonne. These cost increases ripple through the supply chain as construction materials producers pass on higher expenses downstream, thereby amplifying budgetary pressures on large infrastructure projects.
The logistical landscape has also evolved post-ownership change. Under Russian management, domestic deliveries were prioritized even if it compromised efficiency; however, new commercial operators focus on optimizing logistics for larger export shipments. This shift raises concerns about potential domestic shortages during peak construction periods as contractors find themselves navigating tighter delivery schedules and increased working capital requirements.
For refineries aiming to capitalize on these new market conditions, investments in upgrading facilities—such as delayed coking units—are necessary but costly, typically requiring CAPEX investments between €50–150 million. Downstream buyers like cement plants will also need to invest significantly—around €20–40 million—to diversify fuel sources or enhance storage capabilities to mitigate exposure to volatile spot pricing.
The macroeconomic ramifications of these shifts are profound. Increased infrastructure costs due to by-product repricing will lead to heightened capital expenditure needs or reduced project scopes. Over a five-year period, cumulative additional infrastructure costs across South-East Europe could reach between €1–1.5 billion, marking a structural adjustment rather than a temporary spike.
The beneficiaries of this transition are primarily refinery owners and logistics operators who stand to gain higher margins through improved market conditions. Conversely, construction companies bound by fixed-price contracts along with public authorities facing rigid budgets may struggle under these new economic realities.
Looking towards 2030, refinery by-products in South-East Europe will likely be fully integrated into global commodity markets with prices remaining volatile and closely aligned with international benchmarks. Policymakers must adapt their infrastructure planning strategies accordingly, incorporating contingency allowances and flexible procurement models into their frameworks.
The evolving dynamics within the energy sector underscore how interconnected refinery operations are with broader economic activities; shifts in pricing for seemingly peripheral by-products can have immediate impacts on essential public works projects throughout the region.
