Ukrainian drone campaign takes out up to 900,000 barrels a day of Russian oil refining capacity

Ukraine’s drone campaign to knock out Russian refining capacity is scoring some big hits, with as much as 12% of the world’s largest country’s refineries forced to suspend operations. The knock-on effect for tanker shipping is that Moscow may decide to ship more crude than product in the coming weeks while urgent repairs are carried out at multiple facilities.

The Ukrainian military conducted another drone strike on an oil facility in Russia over the weekend. This time, the target was the Slavyansk oil refinery in the Krasnodar region, some 300 km from the border with Ukraine.

According to reports by local media, the attack by seven unmanned aerial vehicles (UAVs), coordinated by the Ukrainian State Security Service and Ukrainian special forces, resulted in a fire at the refinery but without casualties. Russian forces were able to intercept the drones, but the devices that fell into the refinery caused the fire to start. The Slavyansk refinery is a private plant with a capacity of 4m metric tons of oil per year or about 1m barrels per day.

According to multiple media reports, there have been 15 drone attacks against 13 oil refineries in nine regions of Russia in 2024, including nine in just one week.

Oil facilities in Ryazan, Pervyy Zavod, the Rostov region, Nizhny Novgorod, Kirishi near StPetersburg, Oryol, and the Belgorod region, among others, were all targets of recent attacks. Over the weekend, refineries in the Samara region and a facility in the Kaluga region were also hit.

An analyst from Russia’s National Energy Security Fund, Igor Yushkov, said via Telegram that strikes on oil refineries were more problematic than those on fuel depots as the fires in depots only cause short-term problems in the form of burned fuel. He added that strikes on refineries were more serious as such technologically complex facilities require repairs which are complicated by sanctions.

Refineries that stopped operations last week because of the strikes were responsible for around 12% of Russia’s national oil refining capacity according to Clarksons Research while Gunvor Group CEO Torbjörn Törnqvist stated that a total of 600,000 barrels of daily oil-refining capacity had been knocked out by Ukrainian drone strikes.

JPMorgan Chase, meanwhile, estimated the Ukrainian attacks had taken about 900,000 barrels a day of Russian oil refining capacity offline. It could be “several weeks, if not months” until the capacity was restored, the bank suggested in a research note.

To compensate for that, the country will increase oil exports through its western ports in March by almost 200,000 barrels per day or by around 10%, and it is expected that there will be further increases due to the continuing attacks on refineries. A report by Clarksons said that the stoppages at the attacked refineries, in global terms, account for 1% of refining capacity.

According to Arctic Securities, Rosneft’s Ryazan refinery halted operations at two refinery units, while Norsi, Russia’s fourth largest refinery, has closed half of its operations.

Rosneft’s Ryazan oil refinery refines about 12.7m metric tons of Russian crude a year or 5.8% of total refined crude. The refinery stopped its main crude distillation unit with a capacity of 170,00 barrels of crude per day or 47.5% of its crude intake capacity and a smaller unit capable of refining about 84,000 barrels of crude per day or 23.4% of the plant’s total intake capacity.

Lukoil’s Norsi refines about 15.8m tons of Russian crude a year or 5.8% of total refined crude. Its main crude distillation unit was damaged lowering the refinery’s production by 50%. In 2023, Norsi produced about 4.9m tons of gasoline or 11% of Russia’s total. It also produced 6.4% of Russia’s diesel fuel, 5.6% of fuel oil, and 7.4% of the country’s aviation fuel.

Approximately 7% of Russia’s refining capacity has been idled in the first quarter of 2024, according to analysis from Reuters.

These recent refinery attacks have all been aimed at inland facilities, but Ukrainian attacks have also hit refineries in Ust-Luga on the Baltic Sea and Tuapse on the Black Sea. Novatek’s huge Baltic Sea fuel export terminal and processing complex in Ust-Luga was damaged in January by a Ukrainian drone attack. It resumed production in February while fuel loadings resumed in late January. In 2023, the Ust-Luga complex processed 7m metric tons of gas condensate. Another Ukrainian drone strike on January 25 caused a major fire at Rosneft’s 240,000 barrels per day Tuapse refinery on the Black Sea coast.