A project for reconstruction: post-war Ukraine will have its own renewed oil refining industry
3 November 16:39
In the nearly four years of full-scale war with Russia, Ukraine has demonstrated sufficient potential to not only successfully hold the line and occasionally attack and counterattack, but also to simultaneously rebuild homes, businesses, and energy facilities.
However, the main reconstruction projects remain for the postwar period, including those related to the Ukrainian oil refining industry. This was reported by
The Ukrainian defense forces successfully attack Russian refineries almost every day. And these attacks can be considered, among other things, as revenge for the destruction of Ukraine’s largest oil refinery, the Kremenchuk Oil Refinery, by the Russians.
Russia will pay the price
The Kremenchuk refinery was built in 1966. Its design capacity was 18.6 million tons per year. And although in 2022 the refinery processed only about 3 million tons of oil per year, it was still the only powerful oil refinery operating in Ukraine at the beginning of the invasion. That is why the Russians directed their missile strikes at it. But not immediately. Mykhailo Honchar, president of the Center for Global Studies “Strategy XXI“, recalls:
“In total, if I’m not mistaken, there were about 10 massive combined attacks on it during this entire period. The Russians started hitting him in the spring of ’22. At first, they didn’t touch him because Kyiv is 3 days away and so on. And then, when they realized that it was not in 3 days, 3 weeks, or 3 months, they started. So there’s nothing new here – it’s a standard Russian tactic,” Mykhailo Honchar said.
The first time Russians shelled the Kremenchuk refinery was on April 2. Then again on April 24. The next strike with several missiles took place on May 12, when the refinery shut down for the first time. Leonid Kosyanchuk, an oil market expert, continues:
“As far as I know, they tried to restore the Kremenchuk oil refinery twice. The plant’s management tried to restore at least some of the process equipment, but not all of it, because not all of it was destroyed. But, you know, an oil refinery is such a large and complex technological chain, and to break it, you don’t need to destroy all the links. It is enough to break one link, and it no longer works. It’s the same at an oil refinery,” the expert explains.
According to researchers of the Kyiv School of Economics within the framework of the “Russia Will Pay” project, Kremenchuk Oil Refinery was among the four largest enterprises in terms of assets that suffered direct losses from Russia’s armed aggression in 2022 – after Mariupol Ilyich Iron and Steel Works, Azovstal, and Motor Sich. In 2022, Kremenchuk Oil Refinery lost assets worth UAH 405 million.
The company was also hit by massive attacks this summer – on June 15 and August 19.
Ukraine will rebuild
Source
According to oil market expert Leonid Kosyanchuk, it makes sense to restore the Kremenchuk refinery at least because Ukraine needs to close the chain from production to sales of finished oil products.
According to Mykhailo Gonchar, President of the Center for Global Studies “Strategy XXI”, you should always have your own.
“Experience shows that if you don’t have your own, then you just finance the economies of other countries. Therefore, whether to build a new one or restore it, Ukraine needs an oil refinery,” the expert said.
The same opinion is shared by the director of the consulting group A-95 Sergiy Kuyun, Director of the A-95 Consulting Group:
“After the war, we need an oil refinery, not tied to the Kremenchuk refinery, for example. We need an oil refinery in Ukraine in general. We will need more refineries, maybe not so big. Because we have, firstly, our own oil production, and secondly, we have ports to receive oil from the sea. This is very promising, as all the most profitable refineries in the world are located offshore. Finally, we will have a great market without Russian and Belarusian fuel, which has been strangling our refiners with its cheap prices and actually killing refining. Now we will be able to compete with European fuel,” said Mr. Kuyun.
He explained that such competition promises a fair market price and convenient logistics. It will not be easy, but certainly fair competition that will allow Ukrainian producers to earn and develop.
Author: Sergiy Vasilevich
