Russia's energy ministry proposes to defer refinery upgrades due to sanctions: report

Russia's energy ministry is proposing to defer the planned completion of refinery upgrades because of sanctions announced after Russia's invasion of Ukraine.

The US said March 2 it was imposing export controls on technology that Russia could use to modernize its refineries, as penalties ramped up against Moscow for its invasion of Ukraine.

EU energy sanctions also aimed at hampering upgrades to Russia's refining sector were given preliminary approval by member states.

Related Infographic: Sanctions on Russian energy and commodities explained

The Japanese government decided March 8 it will impose an export ban of refining units to Russia, the latest in its series of sanctions following the invasion.

The ministry is proposing to the government to extend the deadline by two years to 2028, according to Russia's Kommersant.

Russian refineries have completed the first phase of their modernization, which started in 2007 and has led to the replacement of outdated equipment from Soviet times.

They are currently implementing a number of projects aimed at increasing their complexity and further reducing fuel oil output while increasing gasoline and distillates yields.

While initially, only big refineries belonging to oil majors were undergoing modernization, more recently medium-sized, independently owned refineries have started their own upgrades.

Previous sanctions on Russia led to delays in some of the projects, and although Russia strove to replace some of the imported equipment with homemade kits, most projects still rely on imported technology.

The ministry is also proposing to temporarily lift the requirement for oil companies to sell a percentage of their output through the St. Petersburg International Mercantile Exchange.

Oil companies are required to sell 11% of their gasoline output, 7.5% of diesel, 11% of jet fuel, 3% of fuel oil, and 7.5% of LPG through Spimex.