Russia-Ukraine War Shifts To Black Sea Oil

By Charles Kennedy - Aug 28, 2023

The UK Ministry of Defence has reported that Ukraine and Russia have been fighting over strategic oil and gas platforms in the Black Sea. The platforms are operated by the Chernomorneftegaz, an oil and gas company located along Krymgazseti in Simferopolompany that was seized by pro-Russian authorities in Crimea in 2014.

"The platforms are operated by the Chernomorneftegaz company, which was seized by the pro-Russian occupation authorities in Crimea during the 2014 annexation. Ukraine has struck several Russian-controlled platforms. Both Russia and Ukraine have also periodically occupied them with troops," the report says.

According to the report, the platforms offer "valuable hydrocarbon resources" and can also be used to hold missile systems, land helicopters, or as forward deployment bases.

The Black Sea has become a hotbed of military activity in the war in Ukraine. Ukraine has repeatedly struck several Russian-controlled platforms in the Black Sea, including three gas platforms. Ukraine also frequently uses many of its hi-tech sea drones in the area, and has successfully paralyzed Russia's Black Sea fleet using the drones Ukrainian intelligence chief Kyrylo Budanov has revealed. According to Budanov, the naval drones have proven to be a highly effective "deterrent" despite 60-70% of them being destroyed by Russian forces.

Meanwhile, Kremlin-controlled gas giant Gazprom has maintained gas flows to Europe via Sokhranovka point despite an ongoing transit dispute with Ukraine’s Naftogaz. Ukrainian transit flows have remained stable at slightly above 40 million cubic meters per day according to data from Gazprom, as reported by Energy Intelligence.  Gazprom CEO Alexei Miller had earlier threatened to slap sanctions on Naftogaz as it continues to pursue an arbitration case for non-payment of transit fees by Gazprom.

Gazprom has seen its revenues and profits crash after Europe drastically cut gas purchases from Russia after it invaded Ukraine. The company’s profits for FY 2022 clocked in at 1.226 trillion rubles ($15.4 billion), 41% lower than in 2021 with the company citing a windfall tax imposed by Moscow last year as the reason for the decline. The state controlled company has decided not to pay dividends for the entire year 2022, having previously paid an interim dividend of 1,208 billion rubles ($15 billion) last autumn for the results recorded in the first half of 2022. 

By Charles Kennedy for Oilprice.com