Russian refineries cut production due to losses: there is a threat of closure

Russian refineries are cutting oil processing or halting production altogether due to financial losses.

The losses are caused by sanctions, high credit rates and export restrictions, Reuters reported, citing industry sources.

At least three refineries — Tuapse, Il’sky and Novoshakhtinsky — have cut production or suspended operations in recent months. Experts say the crisis in Russia’s oil refining industry is being exacerbated by attacks by Ukrainian drones and pressure from Western sanctions. This is forcing companies to sell their products at reduced prices, which is only worsening their financial situation.

The losses suffered by companies, especially those that do not produce premium fuel, are reaching $102 per metric ton. Low-tech refineries that cannot compete in the market are suffering the most. As a result, reduced exports and falling company revenues are reducing tax revenues for the Russian budget.

Recall that there are about 30 large and medium-sized oil refineries in Russia, as well as several small enterprises. However, the current situation threatens the further operation of many of them. Earlier, USM reported that Lukoil denied information about the possible sale of its Lukoil Neftokhim Burgas refinery in Bulgaria.