Russia has paid oil companies more than $34 billion in subsidies due to attacks on refineries

Russian authorities continue to increase subsidy payments to oil companies, whose refineries have come under drone attack more than 100 times this year. As a result, the companies were forced to reduce oil refining volumes to their lowest level in the past two decades.

In October, oil companies received approximately $5.07 billion from the federal budget as part of a shock-absorption mechanism, according to data from the Russian Ministry of Finance. Compared to September, payments increased by 36%, or approximately $1.34 billion, marking the highest level since April 2022.

The government allocated another approximately $1.71 billion to the oil industry in the form of a reverse excise tax—42% more than the previous month. The total volume of subsidies across all channels for the month reached approximately $7.08 billion. This amount exceeds the annual budgets of major Russian regions, including the Sverdlovsk Oblast and the Krasnodar Krai.

Since the beginning of the year, oil companies have received about $20.05 billion through the price-stabilization mechanism alone, according to economist Kirill Rodionov’s calculations. This mechanism was introduced in 2018 and touted as a way to stabilize domestic gasoline prices. However, despite record payments, fuel prices at Russian gas stations this year have risen the most since the early 2010s. In the summer, price increases reached 28% year-over-year, but slowed to 18% in the fall, according to Raiffeisenbank’s calculations.

The total amount of subsidies to Russian refineries this year, including excise tax rebates and investment allowances, reached approximately $34.35 billion. By comparison, this figure stood at about $24.94 billion for January through October of last year, according to Rodionov’s calculations. He noted that such expenditures effectively offset the additional budget revenues generated by rising oil prices.

This is reported by Russian propaganda media.

Video: The Afipsky Oil Refinery in the Krasnodar Region was struck.

As a reminder, on the night of November 3, drones struck the Slavnafta-YANOS oil refinery in Yaroslavl, Russia. A fire broke out in the industrial zone following the attack.

Prior to that, drones had attacked a Lukoil refinery in the Nizhny Novgorod region.