Western sanctions bite. Russian oil giant Lukoil cuts gas production by half amid equipment failure

"Kommersant" reported that the malfunction occurred on January 4, 2024. The broken component is a compressor and won't be replaced shortly. The sanctions imposed by the West have restricted the acquisition of new equipment. Despite these challenges, Lukoil intends to fix the broken component by the spring of this year.

"Kommersant" noted that Lukoil "has become the prime casualty of Western sanctions in the oil sector."

In 2022, the Nizhny Novgorod refinery, where the malfunction occurred, processed roughly 396 million barrels of crude oil. This amount represents about 5 percent of nationwide oil production. "Kommersant" highlighted that these facilities are critical to fuel supply in the Moscow region. This region is responsible for approximately 30 percent of the country's total gasoline consumption.

Remember that in December 2023, Lukoil suffered a substantial setback from Bulgaria. The country wants to minimize its dependence on Russian oil. The European Union has allocated time until the end of 2024 for Bulgaria to shift away from Russian resources that financially sustain Vladimir Putin's military operations in Ukraine. The primary aim of the EU sanctions is to hinder this fuel supply to the Russian military.

According to Bloomberg and AFP, the Russian conglomerate declared it was contemplating the sale of its Neftohim refinery in Bulgaria, which is situated along the Black Sea coast. Worth emphasizing is that this refinery is currently the largest in the Balkans.

"Due to significant changes in the operating conditions of Lukoil Group companies in Bulgaria, the company initiated a review of its strategy on this asset. Various options are being considered, which include selling the enterprise," announced the conglomerate in an official statement.