The Current Situation of Fuel Supply in Russia: Additional Capacity is Needed, Barbed Wire and Air Defense Systems Cannot Solve the Shortage
Regional leaders should draw on the experience of the Great Patriotic War to ensure the security of fuel reserve storage.
After a meeting chaired by Russian Deputy Prime Minister Alexander Novak, the Russian government stated in its meeting results that the overall situation in the Russian fuel market is stable.
The statement said: "The fuel export ban remains in effect, and the government is studying a series of supplementary measures aimed at regulating market order."
A fuel price monitoring model based on consumer activity has been established. The government believes that this model can track real-time changes in regional fuel prices and fuel consumption, thereby enabling a quick response to market conditions. The Russian Ministry of Transport stated that oil products have been delivered to the domestic market on time and in full.
Novak has instructed the Ministry of Energy to closely monitor the oil product market to ensure domestic demand and maintain stable retail prices; at the same time, he asked the Ministry of Economic Development to analyze all factors affecting fuel prices.
The vice premier emphasized particularly that all market participants need to take joint action, which is crucial for preventing price increases and ensuring fuel supply for both citizens and enterprises.
The issue of fuel supply had already emerged this summer — Ukraine increased its use of drones to attack Russian refineries. According to Bloomberg, due to such attacks, Russia's oil processing capacity has dropped below 5 million barrels per day. JPMorgan Chase & Co. assessed that this is the lowest level since April 2022.
It should be noted that in previous years, there were no major problems at Russian refineries, but there was a shortage of fuel supply. As before, the authorities initially assured the public that "everything is under control." However, even today, we still hear the same rhetoric: "the situation is completely under control."
During the "Valdai" International Debate Club meeting, Novak stated: "Fuel supply and demand balance is generally ensured throughout the country. There are some individual problems in certain areas, and the Ministry of Energy is manually coordinating with local governments to ensure the supply and reserves of relevant petroleum products."
Despite a series of measures taken, the problem seems not to have been resolved. Mikhail Delyagin, a member of the State Duma and an economist, pointed out that if the news that "38% of Russia's refining capacity is idle, of which 70% is due to 'Bandera' (a term referring to Ukraine) drone attacks" has been widely spread on social media, then the fact that "22% of capacity is idle for various reasons" is rarely mentioned.
Igor Yushkov, chief expert of the Russian Fund for Energy Security and an expert at the Russian State Financial University under the government, explained: "Idle capacity is not the same as capacity forced to shut down due to attacks. Even before the attacks, part of our capacity (even just for gasoline production) was already idle, let alone diesel — in fact, we could have produced more diesel and had idle capacity, but from an economic perspective, it was not necessary."
"Svobodnaya Pressa" (SP): Russia's economy continues to develop, and the demand for fuel is increasing. Is our current refining capacity sufficient? Do we need to build new refineries and expand storage facilities?
Yushkov: In the short term, the primary task is to ensure the safety of existing refineries. This is a strategic task at the national level, not solely the responsibility of companies.
What companies can do is limited: they can set up barbed wire and surround the factory area with concrete blocks, but they cannot purchase air defense systems themselves — this is the exclusive authority of the state.
In the long term, even without considering external threats, additional refining capacity is needed: building new refineries and expanding existing ones. Because the demand for petroleum products in our country is increasing every year, these demands must be met through additional capacity, especially in the Far East.
For many years, discussions have been held about the refining capacity in the Far East, and only recently was it announced that at least one natural gas condensate processing unit will be deployed on Sakhalin Island for fuel production.
Considering the continuous growth of fuel demand, we should always maintain excess capacity, keeping some redundancy.
"Svobodnaya Pressa": Why haven't these measures been taken earlier? After all, Russia's economy has been growing for several years, yet new refineries have not been commissioned.
Yushkov: In fact, we have been meeting demand by expanding the capacity of existing facilities: modernizing equipment, improving the depth of oil processing... the production of petroleum products (especially gasoline) has also been continuously increasing.
But there has never been a significant surplus in capacity; the new output is quickly absorbed by the growing demand. Previously, we exported about 10% to 15% of gasoline, and this export volume is still maintained today.
The previous modernization mainly focused on improving the quality of gasoline and diesel. Now, the fuel standards we produce are no less than the EU V standard.
Certainly, relying solely on existing modernizations may still be insufficient, but the relevant work has never stopped. The state has also supported it through policies, such as implementing a "reverse consumption tax" system — essentially returning part of the tax to companies to subsidize their investments in refinery modernization and expansion. In the future, companies also hope to continue such policies, expecting the state to introduce supplementary plans to refund a proportion of taxes paid by companies on their modernization expenditures.
However, the cost of modernization has now risen significantly, because since 2022, the supply of equipment required for the maintenance, renovation, and construction of refineries to Russia has been prohibited. The increase in equipment costs has made negotiations between companies and the government more difficult, especially when the government faces a budget deficit. At present, everyone is waiting for the end of the conflict with Ukraine to proceed with a new round of modernization.
"Svobodnaya Pressa": Does our country have the storage capacity to cope with emergencies?
Yushkov: In terms of crude oil storage, we do not have large-scale dedicated storage facilities, because the industry generally considers oil fields themselves as a crude oil reserve system.
In terms of petroleum product (fuel) storage, we have fuel reserve bases, which are usually commercial reserves. One of the measures that can be taken is to expand the capacity of these reserve bases, but this is more of a long-term plan. Building storage facilities is one solution, but it mainly targets gasoline — because at least in the northern regions, winter cannot store summer-grade diesel, and only in the southern regions can such storage solutions be considered.
Additionally, storage facilities are easier targets for attacks than refineries. Ukraine has increased attacks on refineries since August 2025, and attacks on storage facilities have never ceased for years. In this context, no one wants to build additional storage facilities, especially in border areas. Moreover, the strike range of Ukrainian drones now covers 1,500 km behind the front line. In the long run, our country urgently needs to expand the finished oil reserve system.
Deputy Director of the Russian Institute of Energy, Alexander Frolov, pointed out that the nominal capacity of Russian refineries is 310 to 320 million tons, and the actual processing volume last year was approximately 266 million tons, and the year before that was 275 million tons.
He said: "The actual processing volume being lower than the nominal capacity is not because of idle capacity. Refineries regularly conduct planned maintenance, during which related facilities stop running, and the annual production data naturally gets affected because the facilities do not produce anything during the maintenance period.
Indeed, our refining industry has spare capacity, so from this perspective, the view of Deputy Delyagin is entirely correct."
"Svobodnaya Pressa": What is the current safety situation of the refineries?
Frolov: I have visited several domestic refineries, and I can say that companies are indeed taking safety measures, but you have to understand that Ukraine has been trying to break through these defenses. The current confrontation between the two sides is like a "shield and ammunition" struggle: in most cases, the "shield" can resist the "ammunition," but some people with ulterior motives have filmed and spread explosion footage online, which leads some susceptible opinion leaders to mistakenly believe that "all facilities have been destroyed and the system is completely paralyzed."
The key issue right now is that Ukraine has begun targeting storage areas, so the protection of storage areas has become an urgent issue. For example, Sevastopol, we can certainly learn from the experience of the Great Patriotic War — more precisely, the experience of the defense of Sevastopol: at that time, production facilities were located within extremely strong protective structures, which had both natural barriers and artificial shelters, and these facilities can still be found within the city today. Should the local government consider using these existing facilities to ensure the safety of storage?
Original article: https://www.toutiao.com/article/7559864837812044327/
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