Russian Gas Producer Reroutes Exports Due to Drone Strike

Russian gas producer Novatek has rerouted approximately 70,000 metric tons of gas condensate to the Black Sea port of Novorossiisk due to a shutdown at its Ust-Luga gas condensate complex, sources told Reuters.

The disruption traces back to a drone attack on August 24 that ignited a fire at the Ust-Luga facility, incapacitating all operations, including export loadings. Though partial operations resumed later in August, two of the facility’s three processing units remain offline, restricting its ability to refine condensate into key derivative fuels such as light and heavy naphtha, jet fuel, fuel oil and gasoil, according to Reuters.

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With Ust-Luga down, Novatek resumed exporting raw condensate, seeking alternative routes. One shipment of around 140,000 tonnes in total was loaded on September 16 aboard the vessel Tataki in Novorossiisk, based on Reuters sources. Half of that cargo is reported to be the redirected condensate, which was blended with crude from CenGeo and exported under the Siberian Light grade, a low-sulphur crude oil product. The Tataki is said to be currently en route toward the Suez Canal; one source speculated India may be its destination.

Observers will be tracking how quickly Novatek can restore its Ust-Luga units and whether other export hubs like Novorossiisk can absorb sustained flow.

Oil prices, in the meantime, are ticking up and down slightly, with traders weighing U.S. economic data and inventory builds against the potential for more Russian barrels to disappear from the market due to the ongoing Ukrainian drone campaign targeting Moscow’s oil revenues.

At 2:19 p.m. ET on Thursday, Brent crude was trading 0.78% at $67.42, while the U.S. benchmark, West Texas Intermediate (WTI), was trading down 0.73% at $63.58.

By Charles Kennedy for Oilprice.com

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