Russian Lukoil Refinery Incident Has Moscow Considering Gasoline Export Ban

Following an emergency stoppage at Russia’s Lukoil refinery in Nizhny Novgorod on Friday, Reuters reports via Interfax that Moscow is contemplating a ban on gasoline exports as authorities discuss ways to prevent domestic market shortages. 

The NORSI refinery in Nizhny Novgorod is one of the biggest oil refineries in the country, and Monday’s unspecified incident is the third such incident since the beginning of the New Year. Stoppages affected thousands of tons per day in two separate incidents in the first week of January, according to Reuters. 

NORSI has the capacity to process some 340,000 barrels per day. 

Citing Interfax, Reuters reported that Lukoil has halted gasoline exports and is now attempting to rally other oil companies to help make up supply of some 200,000 tons of high-octane gasoline this month and next.

Reuters cited two sources as saying that the refinery will see a 50% reduction in high-octane gasoline production, with one of those sources warning that the refinery will have to purchase gasoline on the market to supply its petrol stations. 

"The breakdown is serious... There will be a reduction in production of AI-95, AI-98 (gasoline grades) this month," Reuters cited one source as saying. 

In mid-November, Russia lifted a ban on gasoline exports put in place two months prior, citing a 2-million-metric-ton surplus but warning that export bans could be reimposed should the surplus vanish. 

Soaring prices and shortages as crude oil rallied in mid-September and the Russian ruble weakened forced Moscow to take action to restrict both diesel and gasoline exports in order to stabilize the market. 

When the ban was lifted in mid-November, it was on the condition that at least 50% of producer supplies fed the domestic market. The bulk of Russian diesel now goes to Turkey, the Middle East, Africa and South America–the new destinations for Russian diesel following a European Union embargo that went into effect in February last year.

By Charles Kennedy for Oilprice.com

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