Overall situation
In 2024, Lukoil produced 80.4 million tons of oil. Exports amounted to 36.7 million tons (about 730,000 barrels per day). Exports of petroleum products amounted to 14.7 million tons (about 300,000 barrels per day). The company owns oil refineries in Perm, Volgograd, Nizhny Novgorod, and Ukhta – three of which have been attacked in the last three months. Lukoil also owns more than 50% of the shares of oil refineries in Bulgaria and Romania.
In 2024, Rosneft produced 184 million tons of oil. The volume of processing amounted to 82.6 million tons, which corresponds to about 1.6 million barrels per day. It is assumed that the remaining oil – about 101.4 million tons (about 2 million barrels per day) – was exported, although a certain share may have been supplied to the domestic market. Of the processing volume, about 0.8 million barrels per day were exported in the form of petroleum products. The company owns 13 large oil refineries in Russia, at least seven of which have been attacked in the last three months. In addition, Rosneft owns more than 50% of the shares of an oil refinery in Germany.
Total exports of oil from Russia are estimated at about 5 million barrels per day, which means that more than half of all exports have come under sanctions. Exports of petroleum products amount to another 2 million barrels per day, and about half of this volume has also come under sanctions. However, exports of petroleum products may currently be significantly lower due to reduced production following the attacks on Russian refineries.
Impact on companies’ operations.
- Oil exports. The oil market for these companies has shrunk significantly, so export volumes are likely to decrease. Companies that agree to buy oil from Rosneft and Lukoil will demand higher discounts due to the risk of secondary sanctions and reduced supply opportunities to other companies.
It should also be taken into account that oil exports are probably at their highest levels now due to the reduction in oil refining. However, a complete cessation of all oil exports should not be expected.
Supplies to China are likely to remain or decrease slightly. Refineries specializing in refining sanctioned oil and supplying it to the domestic market operate in China. A reduction in consumption is more likely in India, Turkey, and other countries.
- Exports of petroleum products.
Both companies have oil refineries both in Russia and abroad. The Rosneft refinery in Germany is under external management, therefore, this is more of a strike against Germany than against Rosneft.
The situation is the same in other countries: oil companies will lose profits from their activities and probably supplies to these plants, but the countries where they are located will lose a supplier of petroleum products.
It is possible that these refineries will be exempted from the sanctions in the near future.
- Spare parts and equipment.
The procurement of spare parts and equipment for oil production and refining is becoming increasingly difficult. This may become particularly noticeable against the background of a deteriorating raw material base (oil is becoming increasingly heavy) and constant drone attacks on refineries. Unlike oil consumers, equipment manufacturers usually supply their products worldwide, which makes the risks associated with sanctions significantly higher for them.
- Oilfield services.
Until recently, Western oilfield service companies such as Schlumberger and others continued to operate in Russia. Now they are winding down their operations. It will be impossible to order refinery or well servicing through a shell company.
At the same time, Russia has its own sufficiently developed oilfield services sector, and a significant part of production will be serviced by domestic companies. Problems will arise at complex fields – with heavy oil, complex geology, and on the shelf (where production is still ongoing).
Conclusion
The sanctions have affected significant volumes of oil and petroleum product exports from Russia. In the short term, this will reduce export volumes. The long-term consequences depend on Russia’s ability and success in circumventing the sanctions, as well as on further actions by the U.S. to impose secondary sanctions for continued cooperation with Rosneft and Lukoil.
Матэрыял дасяжны на беларускай мове: Санкцыі ЗША супраць Лукойла і Роснафты: вынікі і наступствы
