The attack on the LUKOIL plant in Nizhny Novgorod will lead to a decrease in gasoline production

A drone attack on LUKOIL’s Nizhny Novgorod refinery led to the shutdown of its largest primary processing unit, reducing the plant’s capacity by half. While this could be partially offset by loading other units, the market could lose volumes of gasoline and diesel fuel equivalent to about 2.5% of domestic Russian consumption. This will make it more difficult for the government to contain fuel prices this year: stock prices had already started rising on March 12.

The cost of main types of fuel increased on the stock exchange on March 12 against the backdrop of damage to the Nizhny Novgorod refinery of LUKOIL, one of the largest in Central Russia. The price of AI-95 gasoline on the SPbMTSB exchange increased in the European part of Russia by 1.3%, to 59.4 thousand rubles, AI-92 gasoline rose in price by 1.4%, to 47.6 thousand rubles. Summer diesel fuel rose in price by 1.4%, to 60.8 thousand rubles. per ton.

The growth in quotations occurred against the background attacks drone to the Nizhny Novgorod refinery of LUKOIL, where the largest of four primary processing units (ELOU AVT-6) had to be stopped due to a fire. The Ministry of Energy and LUKOIL did not comment on the situation.

AVT-6 has a capacity of 25 thousand tons of oil per day, or 53% of the total primary processing capacity of the Nizhny Novgorod refinery. In total, the plant is capable of processing 17 million tons of oil per year. Last year, according to Kommersant, the Nizhny Novgorod Refinery processed 15.8 million tons of oil and produced 4.9 million tons of gasoline and 5.6 million tons of diesel fuel, which corresponds to an output of 13.4 thousand and 15.4 thousand tons in a day. The Nizhny Novgorod refinery is considered one of the most modern in Russia and ranks fourth in terms of refining volumes.

As a result of damage to AVT-6, the plant may lose half of its primary processing capacity.

Increasing the load on other installations will reduce output losses – they will amount to about a third of refining volumes, Kommersant’s interlocutors believe. At the same time, one of the two catalytic cracking units at the refinery has already been stopped, which has reduced the capacity for producing high-octane gasoline from 400 thousand tons per month to approximately 250 thousand tons.

In the first ten days of March, the Nizhny Novgorod Refinery produced an average of about 8 thousand tons of gasoline and 11 thousand tons of diesel fuel per day, processing about 37 thousand tons of oil. Thus, if refining decreases by a third, losses could amount to about 2.8 thousand tons of gasoline and 3.6 thousand tons of diesel fuel per day.

This is about 2.5% of high-octane gasoline consumption in the Russian Federation and 2.4% of fifth-class diesel fuel. This is a significant volume for the market, especially during the period of high summer demand.

The Nizhny Novgorod refinery in normal times produces 11% of all-Russian gasoline output, but this year it had to work at half capacity, since one of the catalytic cracking units will not return to operation soon, notes Victor Katona from Kpler.

The current accident may create additional tension in the fuel market. The failure of a catalytic cracking unit has already led to stock price quotes for fuel continuously rising at the beginning of the year. The government introduced a ban on gasoline exports on March 1, however, as Kommersant reported, the measure did not lead to a steady drop in stock prices, despite the fact that oil companies significantly increased gasoline shipments to the domestic market (see “Kommersant” dated March 11).

The time frame for repairing the AVT-6 is still unknown, and it is unclear how serious the damage to the installation is. A video distributed on social networks shows a fire engulfing one of the distillation columns. If its complete replacement is required and there is no analogue in warehouses, then, according to Kommersant’s sources, the manufacture of a new column may take several months and another couple of months for its installation and commissioning. AVT units are manufactured in Russia.

The Russian oil refining industry is increasingly becoming the target of drone attacks this year. This year, the Tuapse (Rosneft) and Ilsky oil refineries and the NOVATEK plant in Ust-Luga were attacked. The first of these plants has not yet been restarted.

Dmitry Kozlov