Tom O’Donnell, PhD, an expert on energy and geopolitics, sat down with Kyiv Post to explain what Ukraine’s attacks on Russia’s energy sector will mean for the larger Russian energy sector.

It sounds like a huge number. But how much do you think losing 12 percent of production, in a day, will affect Russia?

First off, although these refineries hit by Ukrainian drones yesterday represent about 12 percent of Russian production, experience shows that they might not each be totally impaired from production. Nevertheless, there are two particularly significant implications for Russia.

First, whatever percentage of Russian refined oil products this impairs, the damage will both deprive the war economy of needed export revenues and/or of much-needed fuels to keep the domestic war economy running.

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Already, Russia had announced it will ban the export of gasoline from March 1 in order to tame prices for consumers in the runup to the presidential elections mid-month. In 2023 about 17 percent of Russian gasoline was exported.

What is the origin of the current price pressure?

The present price pressure is both a result of the demands of the war economy as well as previously successful Ukrainian hits on other refineries that began in January.

This gets to my second point – the successful refinery strikes of yesterday, involving a reported launch of 58 drones, as well as recent hits on a Russian domestic gas transmission pipeline, all demonstrate that the January successes were not one-off special operations, but rather the beginning of what will be a sustained Ukraine armed forces campaign capable of, over time, significantly disrupting Russia’s all-important oil and gas import revenues and internal refined-product supplies.

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If Russia continues to lose refineries, which appears likely, what new complications will it create for Russia?

First, from a strategic point of view, it is important to see these physical strikes against Russian oil and gas infrastructure in conjunction with the sanctions efforts of the USA, EU and other allies aimed at reducing Russian oil profits. These drone strikes should be seen as a “force multiplier” to allied oil sanctions.

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How so?

Consider that, with Russia no longer having the Druzba oil pipeline flowing into Central Europe due to EU sanctions, this has forced it to shift its Urals-region oil exports to seaports on the Baltic coast of Russia and to a new western-Arctic port.  Hence, hitting any refining or export facilities inside Russia along this general Urals-oil export corridor has a significant effect on Russia sustaining export revenues. This oil mainly flows to Turkey, India and China, with Russian oil tankers representing the main users of the Suez and then the Red Sea.  Due to sanctions, most of these ships are now either directly or indirectly Russian-controlled, to avoid the sanctions oil-price cap.

There has been a discussion in US-EU security-and-sanctions circles that these ships could be stopped for inspection by Sweden and/or Denmark in the Baltic, in the straights between their countries, and many might be refused passage due to having sketchy insurance and/or being unsafe, old vessels. 

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What do you think of the oil price cap? Is it a good idea?

From the point of view of strategic impact, the allies’ choice of an oil-price cap has been, in my view, a weak and overly complex-to-enforce instrument.  However, in conjunction with Ukrainian drones’ physical damage, the overall hit to Russian revenues might become significant.

Secondly, Ukraine has also hit refineries in Russia just east of its own territory, which will mainly undermine the region’s war economy and complicate supplying the massive demand from Russia’s invasion forces.  This region already has chronic fuel-supply problems, with farmers last year protesting against a lack of diesel for harvests, causing Russia to ban diesel exports during that season.

Dr. Tom O’Donnell is Berlin-based and is a Global Fellow of the Wilson Center.

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Comments (2)

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Hope
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Russia is paying 16 percent interest rates to ramp up the ruble ...
Hope peace arrives for more stability and justice in the world ...

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John
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It occurs to me that environmentalist should be getting a kick out of russia's oil industry being taken offline.

The reason Russian oil derived products are cheaper than western ones, is production there does not comply with international pollution standards. Furthermore, russia attempts to derail any international attempts to cap CO2 emission or mitigate related environmental damages. Russia is a global parasite. Led oppressively by a kleptocratic thug regime. Now these same despots, try to take over Ukraine's resources; a nation aspiring to higher EU environmental standards. A russian victory in Ukraine would expedite the global negative impacts the Kremlin already has.

Of course putinrump's solution to compete on price is to remove all sustainability aligned controls from US production. A return to the USAs dismal past pollution levels, whose domestic health and environmental harms are now well understood. IN the last 60 years the US has learned, innovated and moved forward with more sustainable processes. But putinrump wants to emulate backwards russia. It would just set the globe on fire quicker.

The solution is to force cheating, malfeasant regimes like putin's to do their share to ensure a livable world remains for future generations.

Jack Griffin
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@John, for crying out loud get some help. So environmentalists are now enjoying pollution? It sounds like you are totally deranged. Perhaps an adverse reaction to the Covid vaccines. Remember, it’s thanks to Trump those vaccines exist. Maybe he targeted you specifically, at least in your screwed up mind. Good luck John!

John
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@MGRA troll Jack briben Griffin,

Oh...jack..I'm a bit embarrassed for you.

I know English is probably not a MRGA trolls' first language, but what was typed above actually says the opposite of what you are asserting.

Give it another read Jack.

It will only take another nanosecond of your time.

You comment above is making you look silly

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