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Russia is preparing to shut down refineries due to European sanctions.
Russian oil refineries are preparing for a forced stoppage of production due to the European embargo, under which oil products will fall after oil from February 5.
The downtime plan for oil refining, the largest manufacturing industry, which accounts for 15% of industrial production in Russia, will be a record in the history of available statistics in 2023, Reuters reports, citing data from Refinitiv Eikon.
In total, 7.9% of refinery capacity, or 26.55 million tons in terms of crude oil, will go to downtime and preventive repairs - 5.9 million tons more than in 2022. Actual downtime, as a rule, is twice the plan, recalls Reuters: at the end of last year, it amounted to almost 39.2 million tons.
The largest amount of idle capacity - 12.3% - is planned for Rosneft, Russia's largest mining company, which accounts for every second barrel extracted from the subsoil. At Lukoil and Gazprom Neft, the figures are several times lower - 5 and 4%, respectively.
In total, refineries that employ 120,000 Russians are preparing to cut production by 15% this year, a source familiar with the government's plans told Reuters earlier.
Sanctions on oil products, which Russia has traditionally exported to Europe, will have a much greater impact than an oil embargo, he explained: it is unlikely that it will be possible to collect a “shadow fleet” for diesel and gasoline, since the parties are usually smaller in volume, and in order to smuggling them into Asia would require many more ships.
According to the IEA, Russia exported on average about 1.2 million barrels of oil products per day in 2022. The closed European market will bring down volumes by 5 times - by the end of the first quarter, about a million barrels of daily exports will be left without buyers, BCS analyst Ronald Smith estimates.
Russia will not be able to produce oil products “for storage”: there are simply no storage facilities in the country where it would be possible to fill in the unsold. One option is to export more unrefined oil, writes Reuters. But how to do this remains a mystery: even the current volumes - 3-4 million barrels per day - are kept by oilmen at the price of huge discounts, offering barrels at half price. And such a policy “runs counter to the interests of the budget” and “cannot continue indefinitely,” says Marcel Salikhov, head of the Institute of Energy and Finance.
https://www.moscowtimes.ru/2023/01/27/rossiya-gotovitsya-ostanovit-npz-iz-za-evropeiskih-sanktsii-a32097