Georgia's refinery, narrowly avoided sanctions, decisively stops using Russian crude oil

The Kulevi Refinery, Georgia’s only national oil refinery, has announced it will fully switch its raw material sources in the near term and completely cease processing Russian crude oil.

The Black Sea Petroleum Company (BSP), which operates the facility, has confirmed this news and issued a statement saying: “Starting from August and September this year, our plant will process only crude oil from non-Russian origins. This move aims to ensure smooth access to high-profit export markets.” According to the refinery’s public relations department, by the first half of 2026, this refinery had already processed over 650,000 tons of crude oil.

In terms of future plans, the Kulevi Refinery intends to begin producing road asphalt in the first quarter of 2027 for both domestic and international markets; followed by the formal launch of aviation kerosene production in the second quarter.

Notably, this shift in feedstock is closely linked to recent international sanctions turmoil. In March this year, the EU had initially planned to include the refinery in the 20th round of sanctions draft due to its purchase of Russian crude oil. However, after reassessment, they changed course and ultimately removed the Georgian refinery from the sanctions list.

After completely cutting off Russian crude oil, the Georgia refinery plans to turn toward crude oil supplies from Turkmenistan and Kazakhstan. Yet this transition faces significant logistical challenges:

-- Transit transport blocked: Currently, plans to transport crude oil from Turkmenistan through Azerbaijan to Georgia via rail have encountered unexpected difficulties. Delays in Azerbaijan’s railway transit arrangements have forced the postponement of activating alternative supply chains.

-- Rising logistics costs: Compared to previously obtaining crude oil directly by sea from Russia’s Novorossiysk port, relying on railway logistics from Central Asia presents new challenges in commercial attractiveness and transportation expenses.

-- Sharp increase in procurement costs: Due to sanctions, Russian crude oil has typically been priced below international market levels. Georgia’s previous large-scale imports of Russian oil were largely driven by economic considerations. Shifting to Central Asian crude will cause the refinery to lose this “discount advantage,” placing it directly into competition with international crude prices.

Although the EU temporarily removed Kulevi Port from the 20th round of sanctions draft in March 2026, this does not mean the risk is eliminated. Western countries have previously accused the owner of the Kulevi Refinery of having potential links with Georgia’s ruling party (the Dream Party) and Russian intelligence services. Based on such allegations, Western nations could impose sanctions on the refinery at any time.

Original source: toutiao.com/article/1869648704169996/

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