* Fuel oil prices decline ahead of IMO regulations
* Bitumen used in road construction and roofing
LONDON, Oct 28 (Reuters) - Trading house Trafigura has exported the first bulk cargo of bitumen from Russia in years under a deal that it says can help the country improve the quality of its refined products ahead of new, global regulations on marine fuel.
The head of Trafigura Eurasia, Jonathan Kollek, told Reuters the first shipment of bitumen, used to make road paving and in roofing, went from the port of St Petersburg to Europe in a 5,000-tonne tanker this month.
The company expects to ship at least 35,000 tonnes of bitumen from a Russian refinery between October and March, with the logistics in Russia being arranged by Fuel Technologies Co in St. Petersburg and outside Russia by Trafigura’s industrial investment, Puma Energy, a significant global bitumen player.
"Russia normally produces a lot of bitumen only when there is seasonal domestic demand in April-September. When refineries cut bitumen production in October-March, they end up having much thicker fuel oil and have to dilute it with gasoil. That is obviously a value loss," Kollek said.
Russia exports some bitumen by rail but the problem for larger shipments by tanker is that the country charges a relatively high export duty, similar to fuel oil, on the generally cheaper product, said the head of Trafigura's Russian trading, Alexei Golubev. That often makes operations uneconomic, he said.
Golubev said Trafigura had made such shipments possible by buying the product during the low-demand period of October-March and executing a complicated hedge.
Global prices of high-sulphur fuel oil have dropped sharply in recent weeks, while bitumen prices have remained more robust. Russia produced 6.8 million tonnes of bitumen in 2018 and 67 million tonnes of fuel oil.
New global marine fuel regulations, known as IMO 2020, come into force next year. They will require ship owners to shun high-sulphur fuel oil and use gasoil instead. (Reporting by Dmitry Zhdannikov; Editing by Dale Hudson )