In a dramatic turn of events, Russia’s weekly oil-processing rates have plummeted to their lowest levels in nearly two months, triggered by the cessation of operations at two significant refineries following targeted drone attacks by Ukrainian forces.
According to Bloomberg calculations based on industry data, Russia processed a mere 5.41 million barrels per day during the seven-day period ending on January 31. This stark decline, indicative of the immediate aftermath of Ukrainian assaults, signifies a drop of 135,000 barrels per day compared to the December average, meticulously calculated by Bloomberg.
As the full-scale war of Russia against Ukraine approaches its third year milestone, Ukraine has amplified its drone attacks, strategically targeting a vital sector crucial to Russian economic sustenance. Russia finds itself grappling with an existential challenge to maintain its supply chain integrity both domestically and abroad.
Despite a slight uptick in processing rates to 5.48 million barrels per day on average for the month of January, as per Bloomberg’s meticulous assessments, this figure remains approximately 60,000 barrels per day below the December norm.
The cessation of primary crude processing at two major export-oriented refineries—Novatek PJSC’s condensate processing plant on the Baltic coast and Rosneft PJSC’s Tuapse refinery near the Black Sea—during the final week of January stands as a testament to the severity of the situation. These interruptions, triggered by drone strikes on January 21 and January 25 respectively, have collectively incapacitated facilities responsible for nearly 5% of Russia’s daily processing average in December.
Both Novatek and Rosneft have yet to furnish official responses regarding the duration and implications of the halts at their respective facilities, leaving industry observers in suspense.
The setback, however, has been partially offset by heightened activity at other refineries across the country. Nevertheless, the recent incident at the Volgograd facility, one of Russia’s largest refineries catering to both domestic and foreign markets, casts a shadow over these efforts. A devastating fire, ignited by a drone strike on February 3, is poised to severely curtail production capacity, as confirmed by a knowledgeable source in Kyiv at the time of the incident.
In the waning days of January, Russia’s daily diesel output remained stagnant compared to the December average, while gasoline production experienced a modest uptick of 2.7%. This increase was primarily attributable to the restoration of processing rates at Lukoil’s Norsi refinery.
