Russia’s largest independent gas producer Novatek has temporarily lost its ability to export a large share of liquid hydrocarbons that it produces at gas fields in West Siberia, after a fire disrupted operations of its processing and export facilities near the Russian port of Ust-Luga on the Baltic Sea.

“According to preliminary information, the fire was the result of external influence,” the company said in a statement.

“The technological process at Novatek-Ust-Luga has been stopped, and an operational headquarters has been established to eliminate the consequences. Damage assessment will be carried out later,” Novatek said.

The company has not commented on local reports that the fire at the facility was caused by an attack of a drone reportedly coming from Ukraine.

So far, there have been no reports of eyewitnesses seeing any drone in the sky just before an explosion that occurred in the deep of night on 21 January.

However, there has been an unconfirmed statement from an eyewitness allegedly seeing a drone sometime after the explosion occurred at the Novatek’s facilities, St.Petersburg news outlet Fontanka said on Sunday.

Novatek’s liquids processing facilities in Ust-Luga are located on the Gulf of Finland about 170 kilometres west of St. Petersburg, and provide a highly important contribution to the company’s revenues.

The gas independent has had to secure additional investments into its second large liquefied natural gas development in West Siberia, Arctic LNG 2, after foreign shareholders had temporarily suspended their participation in this project in response to US sanctions.

According to Novatek, the Ust-Luga facilities process gas condensate that is delivered by rail from another Novatek-run facility, the Purovsky plant in West Siberia , into refinery feedstocks such naphtha and kerosene, and also some fuels.

These highly flammable feedstocks are usually exported and sold at a high margin to refineries outside Russia.

According to Novatek, its production of hydrocarbon liquids, such as oil and condensate, grew by almost 4% last year to about 260,000 barrels per day against 2022, even though its output of gas remained almost unchanged at just over 82 billion cubic metres year-on-year.

Although Novatek stopped disclosing operational results for the Ust-Luga facility after Russia invaded Ukraine in February 2022, it said that the facility processed condensate at the rate of 145,000 bpd in 2021.

The Interfax-Ukraina news agency, citing unnamed sources in Kyiv, said the fire in Ust-Luga was the result of a special operation carried out by Ukraine’s security services.

“The Ust-Luga oil terminal is an important facility for the enemy. Fuel is refined there and some is also supplied to Russian troops,” Interfax-Ukraina cited a source as saying.

“A successful attack on such a terminal not only causes economic damage to the enemy but also significantly complicates the logistics of fuel for the Russian military.”

In 2022, TotalEnergies urgently sold its 49% stake in its joint venture with Novatek, Terneftegaz, to the Russian gas producer after the French supermajor was implicated over its alleged involvement in the supply of fuel to the Russian military.

TotalEnergies earlier faced intense public scrutiny in France since leading newspaper Le Monde said that Terneftegaz had been supplying condensate to Novatek’s Ust-Luga processing facility to make jet fuel that might have been used by Russian military in Ukraine.

Critical infrastructure facilities in the Leningrad region where Ust-Luga and the other Russian key oil export port of Primorsk are located, were placed on high alert on Sunday evening, with security units and law enforcement agencies ordered to search for and destroy any drones, the regional administration said in its social messaging channel.

Firefighters were able to bring under control the blaze at Novatek’s facilities on Sunday morning, regional governor Alexander Drozdenko said via social media.

Russian oil loadings on pause

Fontanka suggested that the attack on the Novatek’s facilities also interrupted the scheduled loading of crude oil into two tankers from a neighbouring oil export terminal to where oil from Russia and Kazakhstan is being delivered via a trunkline operated by Russia’s state pipeline monopoly Transneft.

These two tankers, Clearocean Apollon and NS Champion, that have combined capacity of more than 1.6 million barrels of oil, remained moored at sea near Ust-Luga on Sunday evening, according to marine traffic websites. No other tankers have been seen moored at loading jetties of the oil terminal.

According to Transneft, Russia exported about 680,000 bpd of Russian and Kazakh oil via the Ust-Luga export terminal, and another 890,000 bpd of Russian oil via the port of Primorsk, to international markets last year.

Last Thursday, Fontanka said remains of a drone had been found near Petersburg Oil Terminal, a key regional oil and products export and import facility and part of a larger business empire, where current executive board chairmen of gas giant Gazprom and oil producer Gazprom Neft Alexei Miller and Alexander Dyukov worked in the second half of 1990s.

According to the Russian edition of the Forbes magazine, Novatek’s core shareholders are executive board chairman Leonid Mikhelson and the secretive Russian businessman Gennady Timchenko, who is under international sanctions for his alleged close ties with Russian President Vladimir Putin.