ARKANSAS, January 16 (Future Headlines)- Lukoil’s NORSI oil refinery in Nizhny Novgorod, Russia, is reportedly considering a significant reduction in high-octane gasoline production following an emergency stoppage at one of its catalytic cracking units, according to industry sources on Monday.

The refinery, one of Russia’s largest, experienced an unspecified incident leading to the halt of a unit, as confirmed by Lukoil on Friday. Russian news agencies presented conflicting reports regarding the government’s response. Interfax initially suggested that Moscow was contemplating a ban on gasoline exports, but the TASS agency later denied any such discussions. Russia’s energy ministry assured collaboration with oil producers to maintain an uninterrupted fuel supply to the domestic market during the refinery’s maintenance.

The NORSI oil refinery’s potential reduction in high-octane gasoline output could have implications for the market. While Interfax reported consideration of a gasoline export ban, TASS stated that this option was not under discussion. Lukoil reportedly ceased its own gasoline exports and sought assistance from other oil companies for supplies of up to 200,000 tons of AI-95-grade gasoline in January and February.

Sources indicated that two incidents occurred earlier this month at gasoline-producing units at the NORSI plant, which has an annual processing capacity of around 17 million metric tons of oil. The catalytic cracking unit, with a daily capacity of 6,300 tons, was halted on January 4, and an outage occurred at a reformer with a daily capacity of 3,000 tons on January 7.

Insiders suggested that the refinery might cut production of high-octane gasoline by half, forcing Lukoil to procure gasoline from the market for its own petrol stations. The severity of the breakdown is expected to impact the production of AI-95 and AI-98 gasoline grades in the current month.

NORSI produced 4.51 million tons of gasoline from January to November 2023. Russia, in response to previous fuel price and shortage concerns, implemented a fuel export ban in September 2023, excluding specific countries. While most restrictions were lifted by November, the current situation at NORSI raises new challenges for the Russian fuel market. Industry data suggests that Russia has stockpiles of 1.982 million tons of gasoline to mitigate potential fuel shortages domestically. The incident’s impact on gasoline production and exports will likely be closely monitored in the coming weeks.

Reporting by Moe Khaled; Editing by Sarah White