Russian Refiners Cut Crude Processing as Hefty Losses Mount
Russia’s refineries have started to reduce run rates and some consider shutting in operations, as the facilities are struggling with hefty losses amid export restrictions, rising oil prices, sanctions, and Ukrainian drone attacks, industry sources have told Reuters.
At least three refineries in Russia have recently suspended crude processing, on the back of mounting losses, which are also exacerbated by high borrowing costs amid high interest rates, five sources in the industry told Reuters.
The Tuapse, Ilsky, and Novoshakhtinsky refineries have had to either halt or reduce crude runs in recent months, according to Reuters’s sources.
The Tuapse oil refinery on Russia’s Black Sea coast, owned by oil giant Rosneft, suspended fuel production at the 240,000 barrels per day (bpd) plant in October due to low refining margins. The export-oriented refinery halted crude processing on October 1. It reportedly resumed output earlier in November.
The lower domestic processing rates are reducing Russian fuel exports, thus cutting export revenues for the budget.
Exports of Russian refined oil products by sea fell by 7% in October compared to September, due to an increase in idled refining capacity because of maintenance, Reuters estimates based on data from industry sources showed earlier this week.
Russia had a lot of its refining capacity offline in September, due to regular and unscheduled maintenance. This led to lower refined products output and consequently, to lower shipments from the key export terminals.
As a result of the lower volumes of exports, Russia’s revenues from seaborne oil product exports slumped by 14% in October from September, to $186 million (176 million euros) per day, according to the monthly analysis of Russian fossil fuel exports published by Finland-based Centre for Research on Energy and Clean Air (CREA).
Russia is also thinking of lifting the gasoline export ban, currently in force until the end of the year, considering that domestic fuel prices are stable, Russian Energy Minister Sergey Tsivilyov said on Wednesday.