MRC -- Russian energy company Novatek is likely to resume large-scale operations at its Ust-Luga processing complex and Baltic Sea terminal within weeks, following a suspected drone attack seen disrupting naphtha flows to Asia, said Hydrocarbonprocessing.
The tightening of supply from Russia, following fears of disruption in European naphtha exports to Asia from Yemeni Houthis' attacks on ships in the Red Sea, are driving up naphtha prices and refining margins in Asia.
The profit margin for making naphtha in Asia jumped by about $6 to $91.70 per metric ton over Brent crude on Monday after four straight sessions of losses.
Novatek said on Sunday it had been forced to suspend some operations at the huge Baltic Sea fuel export terminal and "technological process" at the complex due to a fire, started by what Ukrainian media said was a drone attack.
Kommersant newspaper also said on Monday, citing local authorities, that two storage tanks and a pumping stations were damaged due to the incident.
"We believe the plant is likely to return to significant capacity within weeks or, at worst, months," analysts at Moscow-based BCS brokerage said in a note. Novatek declined to comment.
Kremlin spokesman Dmitry Peskov said on Monday that Russia's military and other government agencies were taking the necessary measures, including when it comes to air defenses, after the suspected Ukrainian drone attack on the terminal.
The complex gets gas condensate, a type of light oil, for processing some 7 million metric tons per year from Novaket's Purovsky plant in Western Siberia for further production of oil products, such as naphtha, jet fuel and gasoil.
Analysts also said that Novatek will now be forced to export more gas condensate instead of high-marginal fuel via other terminals. Sinara Investbank said a quarter of Novatek's revenues could be affected due to the incident.
Novatek also exports gas condensate from the Arctic port of Sabetta. The exports grew by around 20% last year to 960,000 tons from 800,000 tons in 2022.
We remind, a fire tore through Ryazan oil refinery, Russia's third-largest, on Friday, the Komsomolskaya Pravda newspaper said, quoting emergency services. The fire at the oil refinery, controlled by Rosneft , has been put out and there were no injuries, RIA news agency reported. Separately, oil tanks at a storage facility in the town of Klintsy in Russia's Bryansk region caught fire after Russian forces brought down an incoming Ukrainian drone.