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Russia’s most troubled oil refineries are at risk of shutting down, people familiar with the matter told Reuters.
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The closure could happen as soon as next year, one source said.
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At least three plants had to dial back or stop production due to heavy losses, the statement added.
Russia’s oil refining industry could see firms close early next year, due to heavy losses that have piled up in recent months, people familiar with the matter told Reuters last week.
Three Russian refineries – located in Tuapse, Ilsky, and Novoshakhtinsky – were forced to cut output or stop production at times, five people who worked at the plants told the site.
The cuts were made due to higher borrowing costs, higher oil prices, and losses from export channels, the people said. The three refineries were also affected after being struck by Ukrainian drones earlier this year, something that damaged production, they added.
Some of the plants could close as early as 2025, one of the sources told the outlet.
Tuapse, which refines Russian-run oil giant Rosneft, had to stop refining a few times this year, the people said. Rosneft did not immediately respond to Business Insider’s request.
Ilksky and Novoshakhtinsky, two smaller, independent refiners, have been producing between 60,000 and 70,000 barrels of oil a day – about half their daily output – for several months, due to tight profits, the sources said.
Rising oil prices and falling diesel prices in Europe have made it more difficult for refiners to turn a profit. Some financiers had to take out loans to stay afloat, people added, which increased prices.
Russia’s central bank raised interest rates to 21% in October, the highest rate of borrowing in the country since the start of the Ukraine conflict.
Losses have been particularly severe at small, low-tech refineries, which do not produce primary oil, two of the people said. For these firms, losses rose to 10,000 rubles per metric ton during the second half of this year.
The fall in revenue in Russia’s oil business has been a major blow to the Kremlin’s war effort, given that Russia is one of the world’s largest exporters of crude and refined products. The country’s oil-related revenue fell 29% year-on-year in October, according to data from the Russian Finance Ministry.
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