(Bloomberg) — Russia’s ability to keep making fuel at the normal pace is looking increasingly precarious following a surge in Ukrainian drone attacks on the nation’s oil refineries, including a fresh incident on Friday.
Most Read from Bloomberg
For now, analysts who follow the nation’s oil industry say that the attacks are manageable for Russia and not enough to cause serious concerns about fuel production, given that the proportion of the country’s refining offline from the incidents is small. However, Ukraine appears set on ramping up attacks at its foe’s energy infrastructure, raising the likelihood of further attempts.
In the past eight days alone, swarms of Kyiv’s drones targeted three major refineries in central and southern Russia, as well as a pumping station on an important crude-export line, according to Ukraine’s General Staff and other security officials familiar with the attacks. The most recent of those was on Lukoil PJSC’s Volgograd refinery on Friday.
Russia, the world’s largest country by landmass, makes vast amounts of fuel both for its domestic needs and the global export market. Production levels still remain high, but they need to be — supplying over 144 million people. However, there are tentative signs that Ukraine’s drones may be starting to chip away at that output.
At least one of the crude-processing facilities attacked a week ago — Rosneft PJSC’s giant Ryazan refinery about 120 miles southeast of Moscow — has halted processing. The scale of any possible damage after the Friday attack on the Volgograd plant is unclear, while Lukoil’s Nizhny Novgorod refinery appeared to be unscathed following an attack on Wednesday.
Sergey Vakulenko, who spent a decade as an executive at a Russian oil producer, and is now a scholar at the Carnegie Endowment for International Peace, said the current situation looks manageable.
“A stoppage of a few refineries for a few weeks is something that the Russian oil industry and economy can easily sustain, judging by the last year experience,” he said. “Whether the effects of the attacks would be substantially wider-reaching and longer lasting is hard to say at the moment.”
The Ryazan refinery is located close to a few others — in Moscow, Yaroslavl, Kstovo — which can cover the possible shortage within its supply zone, Vakulenko said.
Article by:Source:
