The origins of the fuel crisis and analysis of the viable support options during and post the Russian aggression
There are a few reasons for the current fuel crisis in the Ukraine, which reflects itself in the massive shortage of this good in the country.1 The country’s pre-aggression fuel demand (do not mistake with the Russian aggression of 2014) was mostly met by importation and only a minor share of fuel was produced nationally in Ukrainian refineries. It should be noted that the domestic fuel production was still vastly based on imported oil.
Fuel was imported from three main directions. Most of gasoline was transported from the south via Odessa – a main sea gate for the Ukrainian fuel import. This Black Sea passage is blocked now by the Russian military vessels. The other entry point for fuel imports (diesel in particular) was Belarus to the north. Similarly, Belarus ceased the import of fuel during the months preceding the onset of the current conflict. Imports from Lithuania were also affected as they were transported via territory of Belarus. Russia also supplied Ukraine with significant volumes of fuel which in the current military conflict situation between these countries has come to an end as this route is blocked. European Union countries predominantly from the west of Ukraine also provided fuel, but like the Ukraine domestic fuel production these volumes were never substantial. Additionally, the recent missile attacks on the remaining Ukrainian refineries and fuel storage facilities have resulted in internal production also needing to be replaced with imported fuel.
With the current Russian aggression and virtually total blockage of the original fuel supply routes and the destruction of domestic fuel production capabilities, there is a need to reroute Ukrainian fuel supply chains via alternative routes. The most obvious alternative appears to be the creation of new fuel supply chains from the European Union countries to the west of Ukraine: Poland, Slovakia, Hungary, and Romania. This however consequently creates a set of concerns and issues predominantly in the logistics and safety of the deliveries spheres since there is insufficient infrastructure and Ukraine is still heavily involved in the military conflict with Russia. Some of the potential viable solutions have already been implemented or will be implemented soon while others require more time and effort, substantial investment, and the construction of new infrastructure. At the time of writing, some solutions described have not been considered at all.
Ukrainian’s fuel sector pre-invasion
Ukraine is a country dependent on fuel imports. Ukraine’s domestic fuel market is relatively small, with the volume of automotive fuel sales slightly over 12 million tons (8 million tons ON, 2.2 million tons of gasoline, 2 million tons of LPG). Ukraine, due to the outdated nature and lack of investments in the domestic refining industry, by February 24, 2022 (the first day of Russian aggression in 2022) was almost totally dependent on the import of automotive fuels and was unable to produce a large volume of Euro-5 fuels (European fuel standard) in domestic plants.
In 2021, Ukraine imported more than 85% of diesel, almost 80% of LPG, and almost 55% of gasoline. Importantly, most imports (80% of total imports) were made from Russia and Belarus, as well as through seaports (mainly via Odessa). Lithuania (refinery in Mazeikiu) also supplied Ukraine with almost 10% of their total imports (10% of total diesel imports – 690 thousands tons, and 11% of total gasoline imports – 265 thousands of tons) with this transit occurring via the territory of Belarus. Inland imports from other EU countries accounted for another 10% of the supplies (figure 3). Moreover, almost half of the domestic production of fuels (20% of total fuel supplies) was based on crude oil imported through sea oil ports on the Black Sea coast.
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