How Ukraine could cripple Russia’s oil exports
The ongoing campaign of drone strikes on Russia’s oil refineries and depots by the Ukrainian military and special services could ultimately pose a tangible threat to Moscow’s hydrocarbon export revenues. Over 10 such targets, including four oil refineries, have been hit in Russia in 2024.
Just two of these refineries process 30 million tons of oil annually, independent journalist Natalia Kabash wrote in a column for NV Business on Feb. 23. These are Slavneft-YANOS in Yaroslavl and the Volgograd refinery operated by industry giant Lukoil. For comparison, Ukraine imported 1.5 million tons of crude oil for domestic processing in pre-war 2021.
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“Ukrainian drones worth several million hryvnias travel hundreds of kilometers deep into Russia and cause damage worth hundreds of millions of dollars,” Kabash said.
“That’s how much it will cost to repair refineries, which in some cases are out of order for months. In combination with the Western sanctions policy, systematic ‘fires’ at the Russian oil refining industry facilities weaken the enemy’s economy, which is built on the export of hydrocarbons.”
According to the article, official Russian figures suggest that Moscow’s oil and natural gas tax revenues fell by 24% in 2023 to $99.3 billion. State-owned oil giant Rosneft reduced its oil refining output by 10% last year. Overall, Russia’s oil processing declined by 4% in 2023.
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“The productivity of Russian oil refining companies fell in early February 2024, in particular due to UAV strikes on Russian oil infrastructure. Exports of Russian gasoline and diesel fell by 37% and 23%, respectively, in January of this year due to drones hitting only one Rosneft oil refinery in Tuapse,” Kabash says.
She then suggests that if Ukraine manages to take out just 25% of Russia’s oil refining capacity, Moscow will be on track for sustained long-term in tax revenues.
“As a result, domestic prices for gasoline and diesel will rise, which is already a blow to the wallets of ordinary Russians who support the war in Ukraine and [Russian dictator Vladimir] Putin’s regime,” the report says.
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Russia’s oil and gas infrastructure has another weak link, Kabash continues.
“Russia sends fuel for export for its own army through seaports. These are difficult to reach Baltic and Black Sea terminals, such as Novorossiysk, Taman, Tuapse, and transshipment south of the Black Sea entrance to the Kerch Strait.”
“If the Ukrainian special services continue to launch UAV strikes on Russia’s oil facilities, this may lead to a further decrease in the export of Russian oil and cause a ‘fuel famine’ in the Russian army and on the consumer market,” the journalist said.
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Read the original article on The New Voice of Ukraine
