Ukraine has developed new long-range drones that can attack targets deep in Russian territory and are threatening both its oil and gas facilities near St Petersburg, the second largest city in Europe.

Ukraine hit Russia’s critical Ust-Luga oil and gas complex in Russia’s northwest on January 20, a distance of some 1,400km from Ukraine’s border that could halt oil and gas champion Novatek’s exports of petroleum products entirely.

The drones started a fire at the complex and narrowly missed causing much more severe damage as one drone fell only 15mn away from a full oil storage tank, according to reports. The plant, which accounts for all of Novatek’s exports of petroleum products, but not LNG, has been shut down to effect repairs.

Russia’s main oil and gas fields in Siberia, however, at over 2,000km from Ukraine’s border, remain safely well out of range, but most of European Russia, bounded by the Ural mountains, where 80% of the population live, are now all in range.

Since the start of the war, Ukraine has been developing kamikaze drone technology that can fly ever deeper into Russian territory. The first Ukrainian drones to reach Moscow came in a little reported wave of drones launched against Russia from Ukraine at the end of February last year that got little play in the international press, as they caused little damage and only one person died.

That was followed by a far more spectacular drone attack on the Kremlin itself when two drones were shot down over the roofs of the mustard yellow building at around 4am in the morning in May last year. Since then, residential areas in Moscow have been hit a few times, but so far without causing any casualties, as it became clear Ukraine had developed better drones that can make the 700km journey from Ukraine’s border to Moscow.

That capability has now been extended, putting most of European Russia and the nearby oil and gas facilities, as well as Russia’s biggest western oil export terminal at Primorsk in the Gulf of Finland, in range.

Drone tech

Drone innovation has been the hallmark of the Ukraine war. Early in the conflict, the Armed Forces of Ukraine (AFU) took cheap, commercially produced drones, and jury-rigged them by hanging Soviet-era grenades underneath that could be remotely released by the operators – often with deadly accuracy. On one occasion, an AFU operator dropped a grenade through the sunroof of a SUV killing several Russian soldiers who were attempting to evacuate their wounded during a firefight with Ukrainian forces. These drones have been used to counter Russia’s mechanised armour to devastating effect and many were bought with money raised by the public through “dronations.”

“Many of these “hobbyist” drones have been acquired through grassroots crowdfunding efforts, or “dronations.” At just one thousand dollars per unit, the small drones can be rapidly amassed and repurposed by operators for a specific effect,” the Council for Foreign Relations (CFR) said in a note last week

Weaponized drones came to the fore when Azerbaijan used cheap but deadly Turkish-made Bayraktar TB2 drones to great effect in the short Second Nagorno-Karabakh war with Armenia in 2020. The Bayraktar drones sent governments around the world scrambling to develop new and more effective drones. Ukraine in particular commissioned a Bayraktar TB2 drone factory.

“The TB2’s ability to carry multiple air-to-ground munitions and loiter for long periods allowed Ukrainian forces to penetrate Russian air defences and strike heavy targets. However, as time progressed and Russia took greater control of the skies, it was able to detect and shoot down these larger models more easily,” CFR said. “The more abundant, smaller drones are proving to be serious game changers in that they have given Ukraine better battlespace awareness and more capability to hit targets.”

One of the countries that took up the drone baton has been Iran, which developed the Shahed drone, which they have sold in large numbers to Russia, that weaponised them by packing them with explosives and flying them kamikaze-style into targets.

And drones are playing a major role in the Red Sea crisis, which is now expanding to the entire Middle East region. In one of the most recent incidents, Iranian-backed Houthi forces on January 17 expanded the Yemen conflict into the United Arab Emirates (UAE) with drone strikes in Abu Dhabi, a key element of the Houthi extensive arsenal of missiles and rockets.

Both Russia and Ukraine have upped their production of drones and continue to innovate to make them more effective. Bankova has been increasingly talking about boosting the development of its domestic arms production since a conference last September where Ukrainian President Volodymyr Zelenskiy declared that he wants to make Ukraine a military production hub.

According to Kyiv, drone production in Ukraine has increased more than one-hundredfold since the start of the Russian invasion at the Skyeton production facility, and others like it, that makes the Raybird-3 drone system, which has been in use since 2018.

One of the Ukrainian developments about which little is known is the Beaver kamikaze drone, manufactured by the private company UkrJet. It can allegedly fly up to 1,000km, but no official information is yet available. Observers claim that these drones have been used on numerous occasions to hit targets in Moscow, Deutsche Welle reports. The RUBAKA kamikaze drone is another example of a long-range attack drone developed by Ukraine. Little is known about this model, either.

And Kyiv plans to produce a million FPV (first-person-view) drones and more than 11,000 medium- and long-range attack drones this year, Ukraine’s Minister for Strategic Industries Oleksandr Kamyshin said in December. One year ago, Ukraine had seven domestic drone manufacturers and it now has at least eighty, according to CFR.

This week, Ukraine social media reported that the AFU has strapped a machine gun to the underside of agricultural drones that can be used to attack infantry.

Likewise, Russia has started cladding its drones to reduce their visibility to Ukraine air defences. Russia has effectively used its own drone fleet to counter armament such as the US-made Abrams and German-made Leopard tanks, which face “swarms” of drone attacks as soon as they appear on the battlefield, according to reports from the frontline.

“As for Russian drone technology, Moscow deploys indigenous models, such as the Orion, Eleron-3, Orlan-10, and Lancet, but Western sanctions on crucial Russian supply chains have prevented Moscow from excelling in drone production,” says CFR. “Instead, Russia has turned to Iran for a steady supply. The Russians now boast an extensive fleet of Iranian-made Shahed-136 drones that can carry 100 pounds (45.4kg) of explosives over a range of 1,200 miles (1931km).”

In cooperation with Iran, Russia recently finished constructing a drone factory in Tatarstan, 805km east of Moscow – out of range of Ukraine’s new long-range drones – where it could produce an estimated 6,000 Shahed-136 drones (renamed the Geran-2 by Moscow) by mid-2025, according to CFR.

“This expanded drone production could be enough to counter Russia’s shortage of drones on the front lines and turn the tide of the conflict in its favour,” CFR said.

The widespread use of drones is causing both sides a major financial headache. At a cost of a few thousand dollars each, the air defence munitions used to shoot them down can cost tens of thousands or even millions of dollars, depending on the system used, radically changing the economics of warfare.

“An emerging challenge of counter-drone defence is the need to develop and employ a system that is cheaper than its target. Crucially, smaller drones that can swarm toward a target are more difficult to shoot down and can overwhelm air defence systems,” says CFR. “A key countermeasure has been to utilise electronic warfare in the form of jammers, spoofers, and high-energy lasers that prevent drones from reaching their target.”

Jammers are used by both Russia and Ukraine and send out powerful electromagnetic signals that can cause a target drone to fall to the ground, veer off course, or turn around and attack its operator, according to CFR. Both sides are investing heavily into developing these countermeasures.

Novatek at risk

As reported by bne IntelliNews, Russia’s LNG exports are soaring and remain unsanctioned, but Europe is still hooked on Russian gas exports and continues to buy half of Russia’s gas production, increasingly in the form of LNG.

The US has become the biggest exporter of LNG in the last months, overtaking former market leader Qatar, and has been less squeamish about sanctioning Russia’s LNG production.

The Office of Foreign Assets Control (OFAC) imposed sanctions on technology and equipment sales to Novatek, which has stymied the development of its Arctic LNG-2 project that was supposed to come online this month. However, it now appears that Kyiv is on the verge of taking matters into its own hands and could try to destroy Novatek’s facilities entirely.

For now, Novatek’s main LNG facilities remain out of range of Ukraine’s drones, but the company’s petroleum products production is now in range.

Novatek has reportedly temporarily shut down its Ust-Luga facility while it affects repairs. The plant is a major producer of naphtha, jet fuel, fuel oil, gas oil, and liquefied petroleum gas (LPG). If the plant is destroyed the global market for all these products would be affected. Energy analyst David Edick, said that shutting down Russia’s oil and gas exports would be only slightly less disruptive for the global energy market than closing the Straits of Hormuz, as described in bne IntelliNews round up of global chokepoints.

In 2022, the sale of petrochemical products from the Ust-Luga complex amounted to a 39% share of overall liquids sales volumes for Novatek, according to the company’s reports.

It is still not clear as to how much damage the drone strike caused or whether the plant will be shutting down the whole operation for an extended period.

The Ust-Luga complex is located on the Baltic Sea near St Petersburg and 860km away from the Purovsky Plant, its main source of feedstock of stable gas condensate. The giant gas fields in the Yamal peninsula and the Arctic LNG-2 plants are in the same region as the Purovsky Plant, although they do not have a direct connection with the Ust-Luga complex.

The Purovsky Plant delivers Ust-Luga stable gas by rail which is then fractionated producing end products such as naphtha and jet fuel.

The Ust-Luga Complex is Novatek's only plant that exports these petroleum products to the rest of the world. With this drone attack, Novatek's entire petroleum products export business is in danger of being permanently shut down.

In 2022, Novatek processed 13.2mn tonnes of unstable gas condensate at the Purovsky Plant, out of which it extracted 3.3mn tonnes of LPG that was sold to the local market. The plant also produced 9.9mn tonnes of stable condensate, of which 3mn tonnes was sold as the final product and the remaining 6.9mn tonnes was sent to the Ust-Luga complex to be turned into petroleum products that are exported, according to Novatek's 2022 Annual Report.

That 6.9mn tonnes of stable condensate then produced:

2,286mn tonnes of Heavy naphtha;

1,922mn tonnes of Light naphtha;

1,052mn tonnes of jet fuel;

826mn tonnes of fuel oil;

661mn tonnes of gasoil; and

78mn tonnes of LPG.

The drone attack will have no impact on Novatek’s LNG production at Yamal LNG and Arctic LNG 2 plant, which are another 900km away and so out of range of drones for now.

However, deliveries of the 6.9mn tonnes of stable gas condensate to the Purovsky plant may be halted for the meantime due to the shutdown of the Ust-Luga complex, which could slow exports of its petroleum products.

Alternatively, Novatek could simply export the 6.9mn tonnes of stable condensate unprocessed, but experts say that would flood the market with this product, tripling the amount of what used to be exported.