Attacks on Refineries Cost Russia's Budget 1.2 Trillion Rubles

The Russian government is providing subsidies to oil companies whose refineries are shut down due to drone attacks. In July, the federal treasury allocated 192.8 billion rubles as part of a damping mechanism and through a reverse excise tax. In total, payments from April to July reached 1.221 trillion rubles. In July, 18 major refineries were hit by drones, 8 of which halted production. By the end of July, 7 plants had completely ceased operations, while 11 refineries were operating at 30-70% capacity. Oil refining volumes in Russia fell to 3.6 million barrels per day, the lowest level since 2002. The Russian budget is forced to subsidize fuel purchases from Belarus, India, and Morocco. In June, the Russian treasury received 584.6 billion rubles in mineral extraction tax on oil, but one in three rubles had to be returned to oil producers. The budget deficit for the first half of the year reached 5.7 trillion rubles and may increase to 7 trillion by the end of the year.

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