Three Russian Oil Refineries to Halt Operations Amid Financial Losses

At least three Russian oil refineries have suspended or reduced operations due to mounting financial losses, with closures likely early next year, Reuters reported on November 15, citing five unnamed sources.

"We expect that the actual (plant) closures may take place at the beginning of next year," one source said.

The affected refineries—Tuapse, Ilyich, and Novoshakhtinsk—have either scaled back or halted production. Rosneft’s Tuapse plant on the Black Sea has experienced multiple shutdowns this year due to low profitability, while Ilyich and Novoshakhtinsk in southern Russia have operated at roughly half capacity.

All three were struck by Ukrainian drones earlier in 2024, reducing output further. This has led to lower exports, declining revenues, and cuts to the state budget amid high inflation and market uncertainty.

After record profits in 2021 and 2022 fueled by post-pandemic demand, the sector is now suffering as margins decline due to increased competition and a global shift away from fossil fuels.

Smaller refineries have been hardest hit, with losses of up to 10,000 rubles ($102) per metric ton during the second half of 2024. Rising domestic crude prices—50,000 rubles ($502) per ton in October—have worsened the situation, far exceeding the 35,000 rubles ($351) profitability threshold for independent refiners, according to Reuters.

It was reported earlier that three major Russian oil refineries—Volgograd, Ilsky, and Yaysky—have partially halted operations due to delays in completing scheduled maintenance last month, stated the Foreign Intelligence Service of Ukraine on November 7.