Ukraine’s escalating campaign of drone strikes against Russian oil facilities is hitting production and revenue for exports, but there is little evidence of the attacks affecting Moscow’s war machine.
Ukraine used more than 80 drones in a joint attack against Tuapse oil refinery and airfield in western Russia on Monday, according to intelligence chief Kyrylo Budanov. Footage on social media showed the moment of impact and resulting explosions.
Kyiv has carried out more than 30 attacks on Russian oil facilities this year, said President Volodymyr Zelensky last month, abandoning a previous policy of ambiguity over cross-border strikes. The country’s drones can now reach targets more than 1,500km away, he added.
Ukrainian officials and analysts have characterised the campaign as a move to undermine the Russian military, both by reducing revenue that could be spent on the war, and by disrupting fuel supplies to the invasion force.
“For Ukraine to achieve positive military results, it is necessary to destroy Russian infrastructure. Refineries are obviously military infrastructure,” said Mykhailo Podolyak, chief of staff to Mr Zelensky, in May.
Revenue from oil and gas accounts for “30-50 per cent” of Russia’s federal budget, according to the Oxford Institute for Energy Studies.
Several of the refineries targeted in drone strikes were used to supply fuel to the Russian invasion force, an investigation by campaign group Global Witness found.
Ukraine’s regular successes in hitting Russian fuel facilities have exposed Russian defensive weaknesses, says Samuel Bendett, a drone researcher at the Centre for a New American Security think-tank.
“[The strikes are] evidence that Ukraine has studied Russian air defences and can now develop tactics to identify weak coverage areas and gaps, to concentrate drone attacks on certain areas, and take advantage of the fact that many key Russian facilities do not have adequate defensive capabilities against such long-range drone strikes,” he told i.
Moscow recently introduced new mobile defence units to guard against drones – following Ukraine’s example in response to Russian barrages – but this has highlighted that “Russian air defence capabilities may be many months behind the elevated threat level that now enables Ukrainian drones to penetrate Russian airspace”, said Mr Bendett.
The attacks are having an effect. The Pentagon assessed that Russia’s refining capacity had been reduced by 14 per cent in a May report, following a similar calculation by Reuters.
“The Ukrainian strikes have dealt a significant blow to Russia’s refining capacity, knocking out up to 900,000 barrels per day,” wrote Lauri Myllyvirta, lead analyst at the Finland-based Centre for Research on Energy and Clean Air, in an article for Foreign Affairs magazine.
Reduced capacity led to a rise in domestic fuel costs and a drop in exports of refined oil products, including a six-month ban on gasoline exports.
But some of the lost production capacity has been restored, according to assessments by analysts including the Kyiv School of Economics.
Moscow has also compensated by increasing shipments of lower value crude oil, including through a “shadow fleet” of tankers not subject to insurance or price caps introduced by the EU to limit Russian profits.
Official statistics showed oil export revenue of $16.8bn for May, a rise of $2.4bn year on year, with India, China and Turkey compensating for lost business with Europe.
Sergey Vakulenko, former head of strategy and innovation at Russian fuel giant Gazprom Neft, now at the Carnegie Russia Eurasia Centre, estimated that the switch from exporting refined to crude oil as a result of drone attacks could be costing Russia $15 a barrel in revenue – but this was a marginal figure set against typical monthly income.
“From the attack planners’ standpoint, it would be ideal if Russia were not only to lose export volumes, but also experience difficulties in supplying enough fuel for its army and economy,” he wrote. “Alas, that would require a very large-scale attack, as Russian refining capacity is 2.5 times bigger than its fuel consumption.”
To severely damage Russia’s oil industry and affect the army, Ukraine would need to launch attacks on the scale of the Allied assault on German fuel plants in the Second World War, Mr Vakulenko suggested, equating to tens of thousands of bombs a month.
Anton Barbashin, editorial director of Russian political analysis journal Riddle, agreed that Russia has been able to largely absorb the impact of the drone assault.
“The lower level of [refined] oil production…has not been a major problem so far,” he said. “The quantity of attacks is numerous but not enough to change the landscape of oil production or the wider economy.
“So far, it seems to have been manageable. But of course, it complicates the logistics of everything in the regions where Ukraine is able to hit those targets.”
Ukraine is also struggling to fend off a renewed Russian assault on its own energy grid. Air strikes on power plants across the country last month triggered widespread blackouts, with officials warning that some sites are damaged beyond repair.