Transcription
Hello, friends. This is an editorial analysis. The situation with fuel and its prices remains one of the central issues. In Crimea, as you know, gasoline supplies have been stopped again. In the rest of Russia, citizens, it seems, for the first time in the entire post-Soviet history, have started to be interested in where the nearest oil refinery is located, how supplies are carried out, and how logistics are organized, how quickly fuel can be brought to their region from another region if there is a strike on the nearest oil refinery. Of course, this is all a consequence of the military situation. Furthermore, the head of the Central Bank, Elvira Nabiullina, said that a surge in inflation is possible due to the situation with strikes on oil refineries, as prices for almost everything depend on oil and gasoline. And let's not forget, it's not just gasoline, it's also aviation kerosene, on which airplanes fly. It's also diesel, which is necessary for agricultural work. It's also fuel oil, which is necessary for production. How many oil refineries are there in Russia? To what extent did this system, when it was created, provide for redundancy? How quickly can one oil refinery be replaced by another? How is this logistics structured, and why is it structured this way? Today we will discuss this in more detail and, as is customary on our channel, relying solely on facts. You can support what we do through the links in the description. Only your support gives us the opportunity to continue producing the editorial. If we open the registry of the Russian Ministry of Energy, we will see that there are 88 oil refineries registered in the country. Eight of them are under construction, 39 are only being designed, one in Belgorod is being reconstructed, and 40 have been put into operation.
Well, of course, they count differently. They estimate that there are about thirty large enterprises. Moreover, the top ten by volume dominate. And they also count almost 80 mini-refineries, essentially small processing units, but they typically do not produce automotive gasoline. So, it's important to note here that some oil refining enterprises are not focused on producing automotive gasoline or even diesel. Therefore, in reality, there are not that many large enterprises. Ten to fifteen of them already account for a significant share of gasoline production in the country. Plus, there are export-oriented refineries. For example, the Tuapse refinery receives oil via pipeline, processes it, and immediately ships the refined products for export. So, it effectively does not operate for the domestic market. It turns out that those that operate for the domestic market are even fewer. Several dozen of the largest refineries are concentrated in four key regions. Thirteen, that is, a third of all operating ones, are in the Volga region, Tatarstan, Bashkortostan, Samara, and Saratov regions. The remaining plants are located in Central Russia, Moscow, Ryazan, Yaroslavl, Nizhny Novgorod, in Siberia, Omsk, Angarsk, and Achinsk, and in the south of the country in the Krasnodar Krai, Volgograd, and Rostov regions. Why specifically in these regions? The Soviet economy and the pre-revolutionary economy of the Russian Empire have one common feature. Both were built around the railway. And all refineries, most of them, were designed and built during the Soviet period, with rare exceptions, and all are tied to railway transport, built near major trunk lines and hubs. This is because the transportation of oil products was planned to be primarily by rail. And, in fact, this is still the case. This is one of the important distinctions of the Russian market. Reliance on railway transport as the main type of transport.
The plants were also built, in general, with the aim of supplying large cities, large regions. Mostly, our oil refineries are concentrated in the European part of Russia, meaning in the Asian part and the Far East, there are only a few large refineries. Therefore, everything is mainly in the European part of Russia. And, in general, if we look, almost all our refineries were built, firstly, in the Soviet era, and secondly, in the late fifties. So, on the one hand, they are old, but on the other hand, it's roughly the same all over the world. Oil refineries were built a long time ago, and then they are only modernized and their production is expanded.
It is clear that much has changed in recent decades. There has been a sharp increase in demand from million-plus cities. There were not so many passenger cars, and it was not planned that so many would appear. Therefore, it is clear that after 1991, there was a significant gap between the geography of consumption centers and production centers, and, consequently, logistics became more complicated.
So, each refinery produces gasoline for several regions at once?
As a rule, yes, large refineries supply several regions at once. They can transfer fuel from one region to another, meaning they change their sales markets. Even in normal situations, when there are no strikes or unplanned repairs, they still shuffle regions. As a rule, in the summer, when oil refineries sequentially went for planned maintenance.
The main task of an oil refinery is to convert crude oil into various types of fuel and petrochemical products. This process consists of several stages. First, raw material preparation occurs. Oil is cleaned of water and salts at special units. After that, it goes for primary processing, where, under the influence of high temperatures, it is separated into fractions depending on the boiling point. Lighter fractions are obtained: liquefied petroleum gas, gasoline, and kerosene; medium fractions are gas oil and feedstock for further processing; and heavy oils, lubricants, and bitumen.
But these are not all marketable products, and to produce refined products that can be used, including in transport, secondary processing units are used: catalytic cracking, hydrocracking, coking. These are complex processes of splitting heavy molecules and saturating them with hydrogen, which turn oil into pure fuels.
And in addition, there are also so-called upgrading units, which bring these motor fuels and other products to the required marketable form. 85% of oil processing goes into the production of motor fuels, gasoline, aviation kerosene, and about 15% or slightly less goes into various chemical and petrochemical industry products. That is, not as refined products, but as raw materials for chemistry, which is then used everywhere, from the production of dishes to cars, and practically, we are all now surrounded by products made from oil and oil products.
Speaking specifically about gasoline, after the oil is heated, separated into fractions, processed, and purified, the fuel is collected from different components, which are mixed in the required proportions. It is at this stage that the final fuel with a specific quality is formed, for example, 92, 95, or 98 octane gasoline. How do their production technologies differ? Well, the differences are in the octane number, which is mainly achieved through the use of various additives. The requirements of modern engines, including Chinese ones, are mainly oriented towards the use of 95 octane gasoline. For the most premium cars, even 98 octane. But a large part of the fleet, including American cars, still uses 92 octane, about 45% of the market. Gasoline is still 92 octane, although its share is gradually decreasing, and the share of 95 octane is already over 50%. But they change quite smoothly. In general, yes, in recent years, for the last 20 years, there has been an accelerating growth in the consumption of 95 octane gasoline, which creates significant difficulties for refining, because, as a rule, production cannot keep up with this demand growth.
Remember, the other day there was news that the government allowed Russian refineries to lower the quality and produce fuel according to Euro-3 standards, not Euro-5, because producing such gasoline is much faster and technologically simpler. How do these standards differ? Euro-5 is much cleaner and safer fuel, both for the environment and for the car engine, and it has much less sulfur. In gasoline according to the Euro-3 standard, up to 150 mg of sulfur per kilogram of fuel is allowed, while according to the Euro-5 standard, only up to 10 mg. There is an even stricter standard, Euro-6. It allows the same amount of sulfur but even fewer harmful hydrocarbons, which makes the fuel safer for the environment.
Europe has long been using Euro-6, and the differences are insignificant, mainly concerning benzene compared to Euro-5, and at the end of the year, Euro-7 will be introduced. But again, this mainly concerns tires, brake pads, and so on. In Russia, a gradual transition to Euro-6 is also taking place. It was planned for around 2028, but may be delayed due to recent events. So, in general, Russian refining is entirely focused on Euro-5, and Euro-3 is needed simply to urgently cover demand in the event of numerous unplanned accidents with secondary processing units.
How much gasoline is there in Russia at the moment? If we talk about reserves, then according to PLAT, an analytical agency that is essentially the main calculator of the global oil market, in May 2026, before the recent drone attacks on refineries in Russia, there were about 3 billion liters of fuel in the tanks of refineries, oil depots, and other storage facilities. Is this a lot?
It's hard to say if these are large volumes. Again, it is believed that in recent years, fuel storage at fuel depots has actually decreased, largely in the western regions, especially because Ukraine has been actively striking them since 2022. That is, the attacks on oil refineries are very large-scale and active, they began around July 2025. Before that, Ukraine was concentrating its attacks on fuel depots. This is, as a rule, a storage system where fuel is delivered from the refinery by rail, stored there, and then shipped to trucks for distribution within the region, to local areas for refueling.
This is not commercial storage in the full sense. In the world, there is indeed a phenomenon of commercial reserves of petroleum products, despite the fact that they spoil relatively quickly. For example, in the USA, it is not maintained at a very high level, but it is constantly updated, meaning petroleum products do not stagnate at oil depots; there are constant shipments and loadings, so it is constantly refreshed. Similarly, there is also, well, in Russia, there is a relatively small state reserve of petroleum products for emergency situations. It is also formed by constant refreshment of shipments and loadings. All oil depots, storage facilities at refineries, or oil depots in consumption centers are designed for a maximum of 10-14 days. Building storage is expensive, firstly. Secondly, it is economically unprofitable to store for longer, and technologically complex.
Regional authorities have confirmed strikes on oil refineries in the Samara, Yaroslavl, Rostov, Leningrad, Tyumen, Nizhny Novgorod, and Ryazan regions, Krasnodar Krai, Tatarstan, and Moscow. The Moscow Refinery is one of the largest in Russia. It processes about 12 million tons of oil per year and supplies fuel to a third of all cars in Moscow and the Moscow region.
Actually, it is the main plant that is geared towards this market. The Ryazan, Yaroslavl, and Nizhny Novgorod refineries are added as additional balancing plants. But transporting oil products from the Moscow Refinery is still quite strange. It seems to me that all of it is consumed within the Moscow agglomeration itself.
How much did specific attacks on Moscow refineries worsen the gasoline situation, considering the productivity of this plant?
Let's see what was damaged at the Moscow Refinery. Of course, this does not add stability to the market. And we see that in conditions when less fuel is coming from other regions, the possibilities to deliver fuel are reduced, because many other refineries, even from neighboring regions, have been attacked. Yaroslavl, Ryazan, Nizhny Novgorod, and so on, and Tatarstan. Again, this is why Tatneft announced certain restrictions. Well, because its refineries have also been subjected to strikes. But we do not have reliable information anywhere about the degree of damage.
Each refinery occupies an average of several square kilometers of territory, on which there are dozens of units, tanks, pipelines, and pumping stations. At the same time, the plants were designed without accounting for air attacks, so they generally have a large open area. Because of this, refineries are a relatively easy target. We have experience, both our own and foreign, in protecting refineries. In fact, there are many options. That is, besides engineering structures, such as generalized nets, covering them with nets. There are more sophisticated methods – stretching a net on balloons at a certain height. Accordingly, you create a protective dome around the refinery, which is very difficult to penetrate. Again, according to official data, five drones reached Kapotnya. 350 flew, five reached. It must be emphasized here that in no case are we saying that our air defense is bad, because with such a powerful raid, air defense repelled a significant part of the drones, almost all of them. The only question is the cost of this repulsion, you know, a missile costs 4.5 million, and an interceptor costs about 100,000 rubles. So, it is clear that it would be more economically efficient to use interceptors. And the question is, how many such raids can air defense withstand purely in terms of missile and armament stocks? After the attack on the Moscow Refinery, residents of nearby areas reported a smell of burning and an oil rain. Mosmonitoring stated that it was ordinary soot. What ecological consequences can there be from attacks on refineries, considering the specifics of these productions?
I have been to Tuapse, I have been to Kstovo. I flew to Perm, and, well, to Moscow, of course. So, I have been to four similar fires, and almost everywhere there is this oil rain, and it falls one way or another. In Moscow, in this regard, they were luckier, because, well, according to the dispersion model, at least, the pollution went to the northeast. Yes, of course, several settlements in the Moscow region suffered, but practically no one except Kapotnya felt the consequences of these oil rains. There was a good wind, quite favorable meteorological conditions, so the pollution dispersed quite quickly. I expected it to last 2-3 days. We can say that as of today, there is no oil rain. The maximum period that can be provided with a shutdown of capacity without a deficit in supplying the gas station network in the region is probably two weeks. Further, it all depends on how much production has stopped and the degree of damage. There are various options. And many units are repaired quite quickly. So, we are talking about days, well, a maximum of a few, two to three weeks, but in some cases, several months of repair are required. Well, everything is very individual and depends on the degree of damage.
Back in 2023, Russian media wrote that due to a shortage of original spare parts, oil refineries might start using non-original ones for repairs. Similar relaxations were being considered by the Ministry of Energy together with the Ministry of Industry and Trade and oil companies. In 2022, the European Union imposed sanctions against Russia, prohibiting the supply of equipment for the construction, repair, and modernization of oil refineries. Therefore, this rather adds costs to companies; repairs become more expensive and take longer, but due to strikes, they happen more often. And it turns out that much of the equipment becomes more expensive. Some is produced in Russia in recent years, even with increased production of a number of units. Some we buy in Asia, some through parallel imports. So, it's more of an economic issue, actually, rather than a technical safety or impossibility of repair. No, companies are not currently engaged in large-scale production expansion or modernization. They are mainly focused on repairs, but to say that they will stop because spare parts will run out, no, it's unlikely to be stated correctly. Repairs are ongoing, they are active and quite successful, but there are simply not enough repair crews, resources, imported components to restore production so quickly. One of the problems, again, in Russia is that due to climatic features, it is impossible to carry out refinery repairs in winter. Therefore, all repairs are also postponed to the warm season, i.e., to the period of high demand. Summer is traditionally the period of highest demand for gasoline in Russia, both from motorists traveling on vacation and in the sphere of various types of logistics and agriculture. Let me remind you, a complete ban on gasoline exports is in effect in Russia until July 31st. A temporary ban on the sale of diesel fuel abroad for resale has also been introduced.
It is practically impossible to further restrict exports. We have obligations to Mongolia and Central Asian countries, where we supply. They also urgently need Russian supplies. Therefore, it is difficult to do anything more by simply regulating exports.
Well, in the EAEU countries, we have no export-import restrictions. And in this regard, even when a ban is introduced, for example, on exports, it is specified that it is outside the EAEU, and within the EAEU, there should be free flow of goods and services. But fortunately, we did not supply that much of our gasoline to other countries. So, mainly, when we talk about Russia exporting petroleum products, it is diesel and fuel oil. And gas oil, too, which is primary processed oil. We exported little gasoline anyway, so mainly all clients are oriented towards Russian diesel.
In June, the government banned the export of aviation kerosene until November 30th. Aviation kerosene has significantly increased in price on foreign markets due to the closure of the Turkish Straits and rising oil prices. All this history provoked large-scale exports, so the government tried to protect the domestic market from possible shortages in advance.
More and more talk and writing is about importing fuel into Russia, for example, from Belarus.
Yes, it exists. We buy from Belarus. Belarus, in principle, exports its finished fuel to third countries through us. So, they used to buy 18 million tons of oil from us, processed it, six million of which went to the domestic market, and the remaining 12 for further export of the resulting petroleum products. But since 2022, the European market has been closed to them. And now they send their petroleum products through Russian ports in the Leningrad region to more distant markets. They do not provide official data on the current loading, but it is assumed that Belarusian refineries are not fully loaded, so now there is a situation where everyone wins: we supply them with more oil, and they return the resulting petroleum products to us. And this tolling scheme is simply expanding now. What are the prices there, well, that also remains a question. But nevertheless, I don't think it's significantly expensive for us. They still receive money for processing. We receive additional volumes. And the most important thing now is not so much the economic factor, but the factor of the overall volume of fuel, including gasoline, available for the Russian domestic market.
If we talk about the country as a whole, even the European part of Russia and Western Siberia, which are a more or less unified market zone, there is no deficit now. That is, gasoline production is approximately equal to demand. That is, if everything were fine with the volume of gasoline production, then they probably wouldn't have introduced a ban on gasoline exports since the end of winter, there wouldn't have been a zeroing of import duties since last year, and there wouldn't have been such active cooperation with Belarusian refineries. And this issue with lowering fuel quality, this also applies specifically to gasoline, not diesel. Therefore, of course, there is special attention to gasoline precisely because the risk of deficit is much closer, again, due to the fact that we historically produce less gasoline than diesel. But specifically how much we produce each week or each month, all this data is closed. Therefore, we cannot judge this. This also creates separate problems. For example, on the exchange, prices are rising, and exchange players are reacting to the lack of information in this way. They don't know how much gasoline and diesel is currently being produced in the country. And out of fear, they see a picture that some refinery has been damaged. Again, information about some refinery coming out of repair is not published by anyone, for fear of repeated strikes. And from the lack of information on the exchange, panic and price increases also periodically occur. The situation changes quite rapidly, meaning different indicators every day, every week, but approximately, if in barrels, production of petroleum products is maintained at the level of about 4 to 4.5 million barrels per day. This is low, because in reality, it should be around five. At one time, before 2022, it was even six, which was more for export. But essentially, what we are observing now is the absence of this safety cushion, the deflation of the safety cushion that was on the gasoline market. So, production is practically equal to demand, and therefore, there is no reserve capacity. Well, this is the average situation over the past weeks. I repeat, everything is constantly changing. Therefore, talking about a deficit in terms of supply-demand balance is still, in my opinion, premature, but there are many logistical problems. Because when strikes are carried out, for example, on the Moscow Refinery, additional volumes need to be urgently transferred from nearby refineries, and this cannot always be done as quickly as one would like. And it is also more expensive. If the nearest refinery is shut down and reduces shipments, fuel has to be brought from other plants. This increases the delivery distance and, consequently, its cost.
Every year in Russia, the price of gasoline and diesel at retail increases. The question is the pace of this increase. There is a statement that let the price rise, but not above the inflation level. This is actually not fixed anywhere. This was a certain guideline for the government, but it is not an obligation to keep the cost at the level of inflation. For example, last year, the total increase in the price of gasoline and diesel at retail in Russia exceeded the inflation level. The year before last, gasoline exceeded it, diesel did not. Now, if we look, by mid-June, accumulated inflation since the beginning of the year is around just over 3.5%, and the retail price increase for gasoline is already over 6.6%, and for diesel, it's just over 5.5%, so we have already exceeded the inflation level.
In Russia, every year, usually in August-September, there is a problem with the price scissors, meaning wholesale prices are more or less free. They grow much faster than retail prices. Oil companies that own gas stations, in general, shift these costs within their business and, in general, can operate at a loss for some time, even several months. That is, sales are at a loss. But independent gas stations, which still hold a significant share of the market in terms of number, half of Russian gas stations are independent companies not directly affiliated with companies that refine and extract oil. But in terms of sales volume, this is now 20-30% of the market. They have significantly declined in recent years precisely because this problem arises every year when wholesale prices are very high, and they cannot sell at comparable prices at retail, otherwise they lose competition. Therefore, for example, now in Moscow, you can see gasoline from oil companies at gas stations for A92 at 65 rubles, and at a neighboring independent gas station for 75 rubles. Naturally, there is an outflow of demand, and some gas stations may even close under these conditions.
Well, I would say that the most difficult situation is in Crimea. And we saw that literally now the Crimean authorities have announced that they are completely closing the possibility of buying gasoline there, neither with QR codes nor for cash. You officially cannot buy gasoline at gas stations. You cannot buy fuel at all. So, there are special conditions here. And plus, there are no vertically integrated company gas stations there. There are only independent gas stations, so-called. So, there is a special situation.
Since Sunday, gasoline has not been sold in Crimea and Sevastopol to anyone except government services that ensure the life support and security of the peninsula. This was announced after the attack on the ferry "Pioner" and the closure of the Kerch Strait crossing.
There is a logistical dead end. How quickly it will be possible to get out of it is unclear. It is very difficult to judge this. It is clear that, most likely, the intensity of strikes will not decrease. At least, we do not see a decrease from Ukraine, but it is possible that the Russian military will manage to ensure the protection of these land corridors, primarily the Novorossiya highway from the Rostov region. Then, perhaps, the situation will change and the volume of supplies will increase. Perhaps, this is possible in the coming weeks, or at least by the end of summer. The sea route exists and is working. According to the statement of our Commander-in-Chief, the sea is ours, we have no problems at sea. The question arises: why then are you not transporting by sea with tankers, I don't know, through Alushta, through Sevastopol? So, take tankers, fill them with fuel, bring them, if we have no problems at sea. Therefore, a complete blockade of Crimea is, of course, not expected. Anyway, Crimea is not the Atlantic. And in the summer, yes, a pontoon crossing can be arranged, but why let it get to such a situation when it could have been prevented in advance? This is a debatable question. To summarize, what will happen with gasoline and its prices in the near future, given the current situation with refineries?
From the demand perspective, yes, it will be easier in the fall. From the production volume perspective, it all depends on how well we can ensure the safety of refineries. Because refineries are constantly being repaired. The question is to ensure that new and new ones do not go for unplanned repairs. And this is already more of a question for the military. It is their monopoly. It is the monopoly of the state. Companies have now expanded their capabilities to protect their refineries, but they are still very, very limited. You cannot buy some kind of armor on the market and protect your refinery.
We do not know how many strikes there will be, how intense they will be, and how successfully they will be repelled. There are many, many "ifs" here. In the current conditions, the main basis for change is precisely the number and nature of these unplanned emergency shutdowns and the capacities of primary and secondary processing. But it is obvious that we are approaching a period of high demand. This is July-August, and partly September. And we don't yet see signs that this demand is significantly decreasing. But further, it all depends on how many production capacities are in operation.