Ukraine attacks force Russia to process oil abroad

As Ukraine strikes Russia's refineries and fuel shortages worsen across the country, Moscow is now looking to other countries to process its oil.

Kiev has knocked out dozens of oil refineries in Russia with drone strikes in recent months, aiming to disrupt Moscow's ability to finance and support its full-scale war against Ukraine, which began in 2022.

Russia has already halted exports to curb the fuel crisis and imposed rationing measures. Now, Moscow has reached an agreement with a small private refinery in Kazakhstan to use its facilities.

But experts say the move is unlikely to solve Russia's severe fuel shortage, as Moscow has retaliated by targeting Ukrainian energy facilities.

Kazakh Energy Minister Yerlan Akkenzhenov said on August 25 that the Kondensat refinery in western Kazakhstan will process Russian crude oil, with about 70 percent of it being sent back to Russia.

Russia, a country of 143 million people, consumes up to 120.000 metric tons of gasoline per day during the summer months, according to a Reuters estimate. But the Kondensat refinery can only produce up to 200.000 metric tons of gasoline per year, covering about 0.3 percent of Russia's daily gasoline demand.

John Roberts, a senior fellow at the Atlantic Council, a Washington-based think tank, said that in the face of severe fuel shortages, even small additional supplies of gasoline and diesel could help Russia.

This includes the front lines, where fuel shortages have put pressure on Russia's military operations.

"It's possible that this is simply due to a great desperation on the part of Russia," he said. "The shortage of fuel, gasoline and diesel is huge. This helps, but it doesn't solve the problem."

Kondensat's ties to Russia
The Condensate Refinery, which has been operating far below its capacity for years, has had previous ties to Russia.

Company records link Kondensat to Tatneft, Russia’s fifth-largest oil company and third-largest refiner, through Osprey Investment. Osprey is a shareholder in Kondensat’s parent company, Birinshi Shina Kompaniyasy, and previously co-owned Mining Development Company with Turkish fuel distributor Aytemiz. Tatneft acquired Aytemiz in 2023.

In 2024, Kondensat began processing Russian oil, supplied through Tatneft's TANECO refinery in the Tatarstan region. Later that year, Kazakhstan and Russia agreed that Kondensat would export gasoline produced from Russian oil to Russia. This agreement was renewed in 2025.

After the United Kingdom imposed sanctions on Tatneft in 2025, the oil company transferred all of its shares in Aytemiz to TNCI Holding, an investment company controlled by the Government of the Russian region of Tatarstan.

This change removed Tatneft's direct connection to Aytemiz and, consequently, the connection between Tatneft and Kondensat through the common ownership interests of Osprey.

How far can Russia take the Condensate model?

As Ukraine continues to shut down Russian refineries, experts say Moscow is likely to turn its attention to more facilities in Central Asia. Russia is a major political and economic power in this energy-rich region, which was once part of the Soviet Union.

"They will particularly try to put pressure on Kazakhstan and then Uzbekistan to provide them with as much gasoline and oil as possible," said Roberts of the Atlantic Council.

Hennadii Ryabtsev, a Ukrainian energy analyst, said that there is no excess capacity in Central Asia and that the region is "incapable of significantly influencing the situation in Russia."

"The same goes for Kazakhstan, Kyrgyzstan, India, China and Belarus, because for the Russian market these are drops of water in the ocean," he told Schemes, the research unit of Radio Free Europe/Radio Liberty's Ukrainian Service.

Central Asian governments are also likely to be wary of becoming energy suppliers to war-torn Russia, which has faced harsh Western sanctions over its full-scale invasion of Ukraine.

"They have to think: What impact will this have on their trade with the rest of the world? They don't want to end up under sanctions. But perhaps the most important point is that, whether the sanctions are direct or not, this will hit the foreign investment they get from countries other than Russia," Roberts said.

Vladyslav Vlasiuk, Ukrainian President Volodymyr Zelensky's commissioner for sanctions policy, said that Kiev does not think that "Russia will have a ready supply chain of oil products, because everyone understands that this is mainly about military needs."

"This is also influenced by the possibility of imposing sanctions on those who help Russia, such cases have already occurred," he told Schemes./REL