Reuters: Due to US sanctions, Russia cannot repair its oil refineries

Russia has faced problems repairing its oil refineries due to US sanctions.

This was reported by the Reuters agency with reference to sources.

On January 4, engineers of the Russian oil company "Lukoil" discovered a malfunction of a turbine at their refinery "Lukoil-Nizhegorodnefteorgsintez" (NORSY). However, they are unable to repair the turbine because the only company that knows how to do it is an American one.

Itʼs about UOP — an American multinational engineering company that develops and supplies technologies for oil and gas processing, as well as petrochemical production. It withdrew from Russia after the country invaded Ukraine in February 2022.

"They (engineers) rushed to look for spare parts, but could not find anything. Then the whole installation simply stopped," said a source close to “Lukoil”.

Four other sources said the catalytic cracking unit, which is used to convert heavy hydrocarbons into gasoline, has been out of service since January and it was unclear when it could be repaired due to a lack of experience in Russia. The KK-1 unit is one of two catalytic cracking units at the plant.

As a result, the “Lukoil-Nizhegorodnefteorgsintez” refinery — Russiaʼs fourth-largest — cut gasoline production by 40%, two sources said.

According to Reuters calculations, the current failure will cost “Lukoil” nearly $100 million in lost revenue per month, based on the average Russian gasoline price of $587 per ton.

Difficulties in repairing Russian refineries have intensified amid Ukrainian drone attacks that have hit at least a dozen Russian refineries this year, industry sources said. According to Reuters estimates, the attacks forced Russian refineries to shut down about 14% of capacity in the first quarter.

• On March 13, an oil refinery caught fire in Ryazan, Russia, after a drone attack. Prior to that, drones attacked a refinery in the Nizhny Novgorod region and an oil depot in Oryol. At the same time, the oil refinery of the Lukoil company in the Nizhny Novgorod region lost part of its capacity due to the attack. On March 17, another oil refinery in the Krasnodar region of the Russian Federation caught fire due to a drone attack.
• On March 22, the Financial Times wrote that the US even called on Ukraine to stop attacks on Russian energy infrastructure, as this could raise global oil prices and provoke attacks on Ukrainian energy in response.
• At the end of March, a sharp decline in gasoline production was recorded in Russia — the countryʼs gasoline output fell by 7.4% to 754.6 thousand tons.