Russia Plunged Into Summer Fuel Crisis 07/01 06:21

   

   (AP) -- The lines are growing at Russian gas stations -- and so is the 
frustration and uncertainty as several months of Ukrainian attacks have set oil 
refineries ablaze and choked supplies for motorists across the vast country.

   Fuel rationing has been introduced in many regions, with hourslong queues of 
cars snaking beside roads. Social media videos show drivers aghast at the lines 
or swearing at empty gas pumps and rising prices. The mayor of the Siberian 
city of Irkutsk even ordered portable toilets brought in to accommodate those 
in line.

   The fuel crisis -- unprecedented for a nation that is one of the world's 
biggest energy producers -- has brought Moscow's full-scale invasion of Ukraine 
home to ordinary Russians like few other events in the war, now in its fifth 
year.

   It drew a rare admission from President Vladimir Putin, who acknowledged 
that "problems persist for both motorists and businesses," and "there are still 
queues at petrol stations, and finding the right grade of petrol isn't always 
easy."

   Putin insisted the shortages are "not critical" and "temporary."

   But that appeared to do little to reassure at least one motorist in Moscow, 
the wealthy capital typically better-insulated from economic shocks than the 
rest of the country.

   "I think the situation is not very good," the motorist waiting in line told 
The Associated Press on Monday, the day after Putin's televised remarks.

   "They say one thing on television, and in reality it's another. ... People 
are queueing everywhere," he added, declining to identify himself out of 
concern for his safety.

   Ukraine hits energy targets multiple times

   An AP count shows over 50 reported attacks by Ukraine on oil refineries, 
depots, terminals and other oil infrastructure in Russia and the illegally 
annexed Crimean Peninsula since late March. Often, the same facility is hit 
more than once --- such as the refinery in the Black Sea town of Tuapse, which 
was struck four times in just over two weeks.

   As a result, the amount of crude oil Russia processed into fuel in June was 
down 25% from a year ago, to 3.95 million barrels per day -- the lowest level 
in over two decades, said Gary Peach, oil markets analyst at Energy 
Intelligence.

   "The outages are extraordinary," he said.

   Gasoline production has fallen 17% to 850,000 barrels a day, from 1.03 
million a day a year ago -- far short of what's needed for the domestic market. 
Russia exports relatively little gasoline.

   About a third of Russia's oil refining capacity is offline, said Chris 
Weafer, CEO of Macro-Advisory Ltd. Consultancy, noting that because refineries 
don't publicly confirm the extent of the damage, his estimate comes from 
anecdotal evidence and oil industry sources.

   "It comes at a very critical time for the Russian economy, in that the 
agriculture season, particularly the harvest season, is now starting to ratchet 
up," increasing demand, Weafer said.

   Ukrainian officials describe the strikes as a campaign to pressure Moscow to 
end the war by undermining its military logistics and supply lines and 
weakening its ability to mount assaults along the front.

   In particular, Kyiv has sought to isolate Crimea, which was seized from 
Ukraine in 2014 in a move that most nations do not recognize. Attacks earlier 
this year forced the Moscow-installed authorities to enact fuel rationing on 
the peninsula in May and halt sales to civilians there altogether several weeks 
later. Limited sales later resumed in the city of Sevastopol.

   Attacks -- and fuel shortages -- spread

   Ukraine has carried out major drone strikes on Russia's two largest cities, 
embarrassing the Kremlin with images of black plumes of smoke that circulated 
widely online, despite regulations restricting their publication.

   A June 3 attack on an oil terminal in St. Petersburg darkened the sky as 
Putin prepared to host his annual economic forum to attract foreign investment. 
On June 18, a similar cloud rose from the Moscow Oil Refinery on the outskirts 
of the capital, sending greasy black droplets raining down.

   By late June, some form of gas rationing was reported in over half of 
Russia's regions. Some of them slapped strict limits on all gas stations; in 
others, gas station chains limited how much fuel could be bought.

   Officials blamed hoarding and panic-buying, urging motorists to fill their 
tanks only when needed.

   Exports of gasoline and aviation fuel have been restricted, and authorities 
weighed banning diesel fuel exports, too.

   Importing fuel was being considered, with Kremlin spokesman Dmitry Peskov 
saying contacts with some countries were "underway." He described the move as 
"another step toward stabilizing the market and aimed at reducing panic-buying."

   Shortages in Siberia

   The shortages have reached distant Russian regions where no refineries have 
been hit by Ukraine's drones.

   Viktor Shkurenko, who owns retail stores in the Omsk region and other 
businesses, called announcement on limits on gasoline sales there to 40 liters 
(10.5 gallons) per vehicle "unexpected."

   "Nothing was bombed here. We have the biggest oil refinery in Siberia right 
here, and it gave us confidence that this fuel crisis won't come to us," he 
said, expressing worry about how limits could affect his businesses. As of 
Saturday, however, he said his company has not had any problems refueling its 
vehicles.

   In the Siberian region of Zabayakalye, east of Lake Baikal, media reports 
said a garbage hauler suspended pickups and some bus services were curtailed.

   In addition to ordering portable toilets outside gas stations, the city of 
Irkutsk raised public transport fares as of Wednesday, citing rising fuel costs.

   Pavel Kharitonenko, acting head of the Irkutsk branch of the opposition 
Yabloko party, told AP he now finds it easier to walk or use public transport.

   "I don't have the fuel, and I don't want to queue at gas stations," he said. 
The Irkutsk region, home to a Rosneft oil refinery, has experienced acute 
shortages for several days, with lines growing, Kharitonenko said.

   Repairing refineries will take time

   Putin said Russia's stockpiles of gasoline are only 4% lower than what it 
had last year. Weafer, the analyst, says that "reportedly, there are good 
supplies of fuel around the country. The problem is it's in the wrong place."

   Supplies need to be reallocated to regions experiencing shortages, and in a 
big country like Russia, "it's not something that can be done overnight," 
Weafer said.

   "There should be enough, but it will take several weeks to get it from where 
it is to where it's needed," he says. "It's just a huge logistics operation to 
do that."

   Fixing the war-damaged refineries is complicated. Ukraine's attacks damaged 
specialized equipment that is often sourced abroad, making repairs 
time-consuming and expensive as workarounds or replacements are sought by 
evading sanctions.

   "They manage to get these things up and running, not necessarily at full 
capacity," Peach said. "But the extent of the damage this time is so extensive 
that they won't get back to winter levels of refining this summer."

   Some refineries won't be worth repairing until there's a ceasefire or 
armistice, he said, because they will just "get knocked down again."

   Repairing the Moscow Oil Refinery, which supplied 40% of the fuel to the 
capital and the surrounding region, is expected to take at least three months, 
Weafer said.

   If there's no further damage to Russia's oil infrastructure, he estimated 
the shortages will last "probably throughout the summer" because demand from 
agriculture will likely remain high into September.