Impact on the Oil and Gas refining industry of the Russian federation, creating economic losses incompatible with the continuation of the war in Ukraine
The significant difference in resource capabilities between Ukraine and Russia, and the imposed strategy of a war of attrition, has compelled Ukraine to seek ways to effectively counter the enemy by creating and using the latest, innovative means of fire damage of Ukrainian production, which, under existing conditions, can provide Ukraine with strategic advantages. The corresponding means of fire damage, produced in Ukraine, already exist; they are very cheap (when compared to the economic losses of the enemy from using such means) and very effective (as evidenced by the consequences of their use). The practical results obtained from their use, by themselves, will not ensure a guaranteed victory in the war, but they prove that the strategy chosen is correct, and it is sensible and possible to continue in this direction.
The Russian Federation can produce explosives for missiles and shells. However, the production of explosives requires toluene, sulfuric and nitric acids. All oil refineries in the RF, which produce toluene, make it from oil. All plants in the Russian Federation that produce nitric acid do so from ammonia, which, in turn, is made from natural gas. Simply put, all Russian explosives are oil and gas. Oil and gas are weapons. If RF’s access to oil and gas is cut off, it might be possible to stop the production of most of their weapons.
Ukraine has already been consistently striking refineries using UAVs. The export of oil products from the RF has decreased recently: gasoline by 37%, and diesel fuel by 23%. The RF lacks air defense and electronic warfare means to combat drones. More than one million square kilometers of RF territory is in a zone vulnerable to UAVs of the Armed Forces of Ukraine, where more than half of all Russian oil refining industry is located. Moreover, wholesale gasoline prices in the RF, in January 2024, increased by 15%. The RF government has introduced restrictions and forced enterprises to sell their reserves. This is related to the incredible centralization in the RF, including infrastructure. Not only does it have a single energy system that combines all large power plants into a single network, but the majority of its power generation also has an even more centralized fuel supply – gas. Oil refineries, which produce not only toluene but also fuel for RF armored vehicles, require a large amount of electricity.
EXISTING CIRCUMSTANCES (FACTORS) THAT COULD BE LEVERAGED IN THE INTERESTS OF UKRAINE
The list of important, real circumstances (factors) for Ukraine’s victory includes:
1. The absence of adequate protection of Russia’s oil and gas sectors from strikes (special operations) from air, land, and sea.
2. The high level of explosive and fire danger at facilities within Russia’s oil and gas industry.
3. The rigid and excessive centralization of the construction of Russia’s oil and gas sectors.
4. The total dependence of Russia’s sectors on imported industrial equipment.
5. The strict mutual dependence of all components within Russia’s oil and gas sectors.
6. The excessive centralization of management within Russia’s oil and gas sectors.
The combination of vulnerable factors listed above (real existing circumstances favorable for Ukraine’s victory) is a guarantee for rapid growth and widespread economic degradation, which is an extremely important factor in accelerating the loss of combat capability of the enemy forces.
Currently, there is a real opportunity not only to win this war but also to create conditions for effectively preventing Russia’s military revenge in the future.
Russia’s oil and gas sectors are state-forming industries, upon which the rest of Russia’s economy depends. The interaction of technological chains within Russia’s oil and gas sectors is extremely sensitive and interconnected, and under certain conditions, is capable of destroying both itself and the rest of Russia’s economy.
Russia cannot satisfy its own production needs independently, as it does not have the corresponding production capacities. Therefore, it strictly depends on imports, including critical imports. The characteristics of Russia’s oil and gas sectors provide a real opportunity not only to achieve victory in the war but also to create a foundation for long-term influence on the aggressor country, to obtain reparations from Russia.
The implementation of the strategy to strike Russia’s oil industry does not conflict with the strategic economic and geopolitical interests of the USA and the EU.
The strategic economic interests of the USA and the EU in the matter of global prices for the products of the world’s oil and gas sectors coincide and consist of ensuring that prices for oil, gas, and oil products do not experience unpredictable significant and sharp increases, which would negatively affect the economies of the USA and the EU in particular, and the global economy as a whole.
However, success in the war with Russia directly depends on inflicting sharp and significant losses on the enemy in the supply of Russian oil, gas, and oil products, for military needs, domestic consumption in Russia, and to the global market. The more and faster Russia loses on the international oil market, the sooner it will lose the ability to continue the war with Ukraine.
This aspect is of fundamental importance and requires careful assessment of the consequences of its implementation.
Thus, the depth of the fuel and economic crisis depends on the degree of market dependency and the ability for rapid diversification of supply sources.
Preliminary calculations show that:
in the event of even a rapid loss of Russia’s oil export capabilities, the existing additional, reserve extraction capacities of other participants in the global oil market will, in a short time and without significant additional expenses, compensate for at least 75% of the Russian oil volume, preventing a sharp increase in global prices, and avoiding a fuel crisis;
25% of this redistribution will be received by the USA and Canada – key countries in the anti-Putin coalition;
the destruction (damage) of oil industry facilities in Russia by Ukraine will not cause economic damage to countries friendly to Ukraine.
Russian oil and oil product export terminals
The most powerful source of free-convertible currency income to Russia is the export of oil and oil products. Technically, the industrial complex consists of exploration of oil fields; extraction wells; networks of oil pipelines and compressor stations; oil storage facilities; oil refineries and networks of product pipelines, and, specifically – oil terminals, which ensure the loading of oil (or oil products) into tankers that transport oil (oil products) to the recipient.
To ensure the functioning of the oil extraction industry, substantial capacities of other sectors are involved. Foreign currency earnings from oil are used in all other sectors of Russia’s economy without exception.
Since the collapse of the former USSR, cargo oil (as well as product) terminals have undergone significant levels of replacement of some equipment, which was produced in the former USSR, with import models, most of which are manufactured in Western countries.
Thus, the destruction (damage), even if a part, of the equipment at an oil terminal, will lead to its prolonged shutdown, which, in turn, will affect the entire reverse direction of the technological chain: oil processing (if oil product export); transportation and extraction of oil.
If the stoppage of production occurs for an extended period (from 1 to 4 weeks), the risk of failure of an oil extraction well significantly increases, leading not only to substantial financial losses but also to the loss of the very possibility of oil extraction from the well. This is particularly relevant in the harsh climate of northern Russia and Siberia, where a significant part of Russia’s oil extraction industry is located.
A very effective scenario – disabling oil terminals, will lead to problems across the entire technological chain, up to the stoppage of oil extraction from the well.
Over time, the volumes of financial losses will begin to grow in a geometric progression, spreading the crisis to other economic sectors simultaneously:
1. The Russian military – significant problems with military logistics, fuel supply for military equipment, production of explosives, gunpowder, and other oil refining products for military purposes, and as a result, a significant loss of combat capability of the troops.
2. The transport sector of Russia – from a shortage of fuel (lubricants) to engine failures, due to a sharp decrease in fuel quality.
3. Complications in infrastructure and communications operations, timely remediation of technogenic incidents and accidents, emergency medical services, emergency services, police, etc.
4. Complications in agriculture and the food industry – difficulties with planting and harvesting operations, crop processing, complications in importing animal embryos, means of combating agricultural pests, a rapid increase in the shortage of food products;
5. All other sectors without exception.
POSSIBLE CRITICAL OBJECTS OF THE RUSSIAN FEDERATION WHOSE DESTRUCTION (DAMAGE) WILL HAVE AN IMPACT ON THE CONDUCT OF MILITARY OPERATIONS
The list of seaports, and oil terminals that ship oil and oil products from regions of Russia, either bordering the territory of Ukraine or located within accessible distance:
1. The Black Sea. Novorossiysk seaport. “Oil complex Sheskharis.” 30% of Russian oil and oil product exports. 7 tankers simultaneously.
2. The Baltic Sea. Primorsk trade seaport. Oil and oil products.
3. The Baltic Basin. Ust-Luga seaport. Transshipment of liquefied hydrocarbon gases and light oil products.
4. The Caspian Sea. Makhachkala International Trade Seaport. Handling tankers up to 10000 tons. Nearby oil depot, connected to the Baku-Novorossiysk main oil pipeline.
Oil Refineries
In the Russian Federation, there are 32 large oil refineries, but only about 10 have production capacities of over 10 million tons per year:
1. “Gazpromneft-Omsk Refinery,” 20.89 million.
2. Kirishi Oil Refinery, 20.1 million.
3. Ryazan Oil Refining Company, 18.8 million.
4. “Lukoil-Nizhegorodnefteorgsintez,” 17 million.
5. “Lukoil-Volgograd Refinery,” 15.7 million.
6. “Slavneft-Yaroslavl Refinery,” 15 million.
7. “Lukoil-Perm Refinery,” 13.1 million.
8. “Gazpromneft – Moscow Refinery,” 12.15 million.
9. RN-Tuapse Refinery, 12 million.
10. Angarsk Petrochemical Company, 10.2 million.
Gas Industry
4/5 of Russia’s military industry depends on gas. Gas is primarily extracted in one place, on the Yamal Peninsula, and transmitted to consumers and for export via a system of main gas pipelines.
For reference:
In 2016, within the RF, 457 billion cubic meters of gas were consumed, of which 156 billion cubic meters were used for electricity production, 130 billion cubic meters for industry, and 87 billion cubic meters for boilers and households. In 2016, the share of gas in power generation was 72.6% across the country, and this share is increasing every year.
On the map of the main gas pipelines coming from Yamal, there is a place known as the “Yamal Cross,” where 17 large gas pipelines intersect. It is located on the bank of the Right Khett River, near the village of Pangody, and from satellite, it looks like two crosses painted directly on the tundra. It is here, with one strike, that 85% of Russia’s natural gas production can be cut off, isolating from gas and, as a consequence, from electricity, heat, and raw materials for the production of explosives, the entire European part of Russia, where the bulk of the population and the bulk of the military industry are located.
Additionally, a critical object is the Vorkuta Line Production Directorate of Main Gas Pipelines LLC “Gazprom Transgaz Ukhta”, which includes the world’s northernmost compressor stations: Baydaratskaya, Yarinskaya, Gagaratskaya, Vorkutinskaya. In 2022, the volume of transported gas amounted to over 129 billion cubic meters.
Also, the destruction of gas compressor stations closer to Moscow, without which the transportation of gas from Siberia is impossible, is feasible. The massive Novoarzamas Gas Compressor Station, near Nizhny Novgorod, transports gas from Siberia to the entire region. The Kasimov Underground Gas Storage, located between Vladimir and Ryazan southeast of Moscow and with a capacity of 12 billion cubic meters of gas, supplies gas to the entire region.
Additionally, damage to any section of the gas pipeline is possible. The gas pipeline system is so long, and there are so many vulnerable objects on it, that all the world’s air defense systems are insufficient to provide their reliable protection. Thus, a long-range UAV might be enough to stop most of Russia’s military factories.
CONCLUSIONS
The destruction (damage) of objects in the oil and gas extraction sectors of Russia, along with information support and psychological influence on the population of Russia, are real and maximally effective to implement.
The impact of the consequences of strikes (special operations) begins immediately after they are applied, grows nonlinearly, and spreads to the entire Russian economy, offering the opportunity to force the opponent to stop the hot phase of the war with Ukraine and to question the existence of the Russian state, as a result of the complete collapse of the Russian economy.
The simultaneous impact of all negative factors will show that Russia is an unreliable partner and cannot fulfill its contractual obligations, which, in turn, will lead to the loss of traditional oil and gas markets, acceleration of the economic crisis into a full-fledged economic collapse, reduction in the purchasing power of the population, increase in supporters of protest and anti-war measures, and encouragement of the indigenous peoples of Russia towards secession.
