Russia Slashes Fuel Exports After Drone Attacks and Fires

Russia has cut its gasoline and diesel exports to non-CIS countries, after drone attacks and fires damaged its refineries and fuel terminals

by Victor Adetimilehin

Russia has drastically cut its gasoline and diesel exports to countries outside the former Soviet bloc, following a series of drone attacks and fires that damaged its refineries and fuel terminals.

The Ministry of Energy said on Wednesday that gasoline and diesel exports have been reduced in January by 37% and 23% respectively from the same month in 2023.

The move comes as Russia is already voluntarily cutting its oil and fuel exports by 500,000 barrels per day in the first quarter, as part of a deal with the Organization of the Petroleum Exporting Countries and allies (OPEC+) to support the energy markets.

But the export cuts announced on Wednesday are separate and prompted by downstream capacity outages, caused by what the ministry called “unplanned repairs” at several refineries.

A Flare-Up of Hostilities

The repairs are the result of a flare-up of hostilities between Russia and Ukraine, which have been at war since 2022 over the annexation of Crimea and the separatist conflict in eastern Ukraine.

Both sides have targeted each other’s energy infrastructure in strikes designed to disrupt supply lines and logistics and to demoralize their opponent.

On Jan. 21, a fire broke out at a huge Baltic Sea fuel export terminal at Ust-luga, as well as a nearby fuel-producing complex, after what Ukrainian media said was a drone attack.

The terminal, operated by Russian energy giant Novatek, is a key hub for exporting naphtha, a refined product used to make gasoline and petrochemicals.

Russia will likely cut exports of naphtha by some 127,500-136,000 barrels per day, or around a third of its total exports, according to traders and LSEG ship-tracking data.

A week later, another fire, believed to be caused by a technical incident, halted a unit at NORSI, the country’s fourth largest refinery, located near the city of Nizhny Novgorod.

The refinery, owned by Russia’s second-largest oil producer Lukoil, produces gasoline, diesel, jet fuel and other products for domestic and export markets.

Russian Deputy Prime Minister Alexander Novak said on Jan. 27 that repair work would take a month or a month and a half.

A Boost for Domestic Supply

The ministry also said on Wednesday that major Russian oil companies had boosted gasoline production, which resulted in an increase of gasoline supplies to the domestic market in the first 25 days of January by 7%, or 150,000 metric tons, year-on-year, and diesel supplies by almost 17%, or 490,000 tons.

The country’s inventories for ensuring stable supply of the domestic market amount to 1.9 million tons for gasoline and 3.9 million tons for diesel fuel, up 16% and 7% from January 2023, it said.

The ministry said it was monitoring the situation closely and taking measures to prevent any shortages or price spikes in the domestic market.

It also said it was in constant contact with its OPEC+ partners and other major oil producers to coordinate actions to stabilize the global energy market.

Hope for Peace

The export cuts and refinery outages have added to the pressure on the energy sector, which is already facing challenges from the transition to cleaner sources of energy and the impact of climate change.

But they have also highlighted the need for a peaceful resolution of the conflict between Russia and Ukraine, which has claimed thousands of lives and displaced millions of people.

The international community has been calling for a ceasefire and a diplomatic dialogue to end the violence and restore stability in the region.

The United Nations, the European Union, the United States and other countries have also offered humanitarian aid and economic assistance to the affected populations.

Some analysts have suggested that the energy crisis could provide an incentive for both sides to seek a compromise and avoid further escalation.

They have also expressed hope that the recent talks between the leaders of Russia and the United States, as well as the involvement of other regional powers, could pave the way for a lasting peace.

Source: Reuters

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