TTstudio/Shutterstock Save for later Print Download Share LinkedIn Twitter While mulling over harsher sanctions against Russia in retaliation for the invasion of Ukraine, the US and Europe could consider targeting refining and petrochemicals, a sphere where Russia is very vulnerable.Russia is highly dependent on both Western-made catalysts, equipment, and services for key refining processes such as hydrocracking and hydrotreatment, and a prohibition, or even a partial restriction, of these items could deal a crippling blow to the industry.Deprived of catalysts – the zeolites that split long-chain hydrocarbon molecules and scrub off harmful sulfur atoms – Russia’s refiners would yield a slate of dirty, sub-standard products, or might have to shut down altogether.“They might have some [catalysts] in storage, but every two years at least, if not every year, those refineries have to go into maintenance. So without fresh supplies of catalysts and replacement for equipment, the refineries will either produce a slate of poor-quality products or be forced to run only primary distillation units,” a Russian refinery analyst said.Reports have indicated that the White House administration is reluctant to enact any punitive measures that would harm US or European consumers. Europe is particularly dependent on imports of Russian diesel. Diesel/gasoil exports to Europe amount to some 900,000 b/d, including about 550,000 b/d of ultra-low-sulfur diesel.Still, sanctions might be tailored in such a way that would do minimal damage to the West – such as hitting Russian gasoline or petchems, neither of which Europe depends on, or preventing Western firms from licensing new refining projects. Secondary Refining Processes in Russia ('000 metric tons)202120202019 Hydrotreatment - diesel65,91165,26365,719 Hydrotreament - kerosene6,2155,1876,270 Catalytic Reforming (gasoline)21,22020,19521,018 Isomerization8,7118,5508,040 Catalytic Cracking20,95919,43922,757 Hydrocracking19,15618,25218,171 Source: Energy Intelligence Western DependenceRussia is the world’s third largest refining industry. It exports some 2.8 million b/d of oil products, making it the second largest exporter after the US. According to customs data, revenues from these sales totalled $70 billion last year – more than exports of natural gas and LNG combined, which speaks to the sector’s importance for the federal budget.It is estimated that Russia imports about 75% of the catalysts it uses for hydrocracking, hydrotreatment, and catalytic cracking – all of which are essential for producing quality transportation fuels.According to a recent report by Rupec, a Moscow-based firm specializing in downstream analysis, Russia imported $187 million worth of catalysts in 2020. The US accounted for one-third of Russia’s catalyst imports that year, while European countries — Denmark, Belgium, Germany, Italy and France — accounted for about half.What’s more, virtually all the technology for both conversion and upgrading units, as well as steam crackers used in petchems production, is licensed by US and European vendors. A list of technology partners for Taneco, one of Russia’s most advanced and ambitious refineries, reads like a who’s who among Western refining technology leaders: Chevron Lummus Global, Honeywell UOP, WorleyParsons, Axens, Foster Wheeler, GE Energy.Even hydrogen production which refineries need for producing gasoil – and Russia cranks out 1.6 million b/d of diesel – depends on Western vendors. Denmark’s Haldor Tapsoe, for instance, is a leading provider of this technology.Targeted sanctions could prevent these companies from providing certain catalysts, spare parts, or repair services to Russian refiners, hamstringing their operations. Moreover, projects currently under construction, such as the modernization of Rosneft’s underdeveloped refining fleet, could also be sanctioned. Homemade CatalystsEven since relations with the West deteriorated in 2014, Russia has prioritized projects to reduce dependence on imports, particularly those, like refining catalysts, that have no domestic alternative.At the time, Russia was 100% dependent on catalysts for hydrocracking and hydrotreatment.Gazprom Neft, Russia’s third largest producer, was given the green light to spearhead an effort to help Russia become self-sufficient in catalysts. Finally, in December 2021, the company began launching a catalyst plant this year in Omsk.The facility will have a capacity of 21,000 metric tons per year, which Gazprom Neft claims will be sufficient to meet domestic needs – particularly for hydro-process and catalytic cracking.Still, the plant will need time to ramp up to capacity, and there is no clarity on how the new catalysts will perform effectively compared to imported variants.In 2020, Russia's largest refiner Rosneft launched a plant to produce catalysts used in hydrotreating and hydrocracking processes. The facility was conceived to produce some 200 kilograms of catalysts per day, which Rosneft said could help ease the company's dependence on imports from 95% to 50% by 2024. However, experts say that the facility won't be enough to meet even Rosneft's own needs, while the work of home-made catalysts has yet to be tested.