A noteworthy new issue has arisen on the Russian rail network. Up to 40 per cent of oil at Russia’s refineries is not being accepted for transportation by Russian Railways (RZD). At least, that is how the oil companies explain the situation. By contrast, RZD says that refineries are not presenting it with the intended volumes for transportation.
Russian companies such as RN-Trans (part of Rosneft) and Gazprom Neft have complained to RZD officials, highlighting significant delivery delays, both domestically and for exports. They are concerned that the drop in fuel transportation could lead to domestic supply issues sometime in the future.
Interestingly, the start of these new problems with oil transportation seems to coincide with the turn of the year. On 1 January, new priority rules came into effect in Russia, which cancelled the previous fuel prioritisation on the network. Oil companies say that that has made it easier for RZD to justify why it is not transporting as much fuel as it used to previously.
Russian Railways points to the oil companies
RZD, for its part, has a different reading of the situation. The rail operator is saying that oil companies are not presenting as much fuel to be transported, and so there is simply not as much to transport as earlier. This is reportedly backed up by data in RZD’s planning system, according to Russian media.
If the new priority rules are not the issue, then some Russian market parties cite labour shortages as a possible culprit. Oil refineries may not be able to output as much fuel as they used to. That could also explain the ongoing situation.
Others suggest that they may not be able to meet production targets on time, and with a rigid rail transportation schedule, they could be missing their allocated timeslots. No mention was made of the continuing Ukrainian drone attacks on Russian oil facilities, which could also be contributing to the drop in fuel on the rails. According to the Moscow Times, those have taken out 10 per cent of Russia’s refining capacity.