Georgian Refinery to Complete Shift From Russian Oil by September

Georgia's Kulevi oil refinery, located on the Black Sea coast, has announced its intention to completely halt the processing of Russian crude oil by the end of September 2026. This strategic shift comes in response to sanctions imposed by the European Union (EU). Black Sea Petroleum (BSP) LLC, the owner of the refinery, stated that the facility will exclusively process non-Russian crude going forward. This move is a direct consequence of the EU's broader efforts to curb Russia's energy revenues following its invasion of Ukraine and marks a significant change for Georgia's energy landscape.

The EU included the Kulevi refinery in its 21st sanctions package, which became effective in July 2026. These sanctions provide the refinery with a six-month grace period to diversify its crude oil sources, with the official ban on transactions set to take effect on January 25, 2027, should it fail to cease processing Russian oil. In response, BSP commenced processing Kazakh crude in early July and anticipates the first shipment of Libyan oil between August 20 and 30. A supply agreement for Libyan oil was signed on July 3, 2026, valid until the end of 2027, with an option for extension.

This development is expected to significantly impact the Kulevi refinery's market position and export capabilities. The refinery had previously been almost entirely dependent on Russian crude, with reports indicating that 99% of Georgia's crude oil imports in 2026 originated from Russia. By transitioning to non-Russian sources, the refinery aims to gain access to high-margin export markets, including the EU, and reduce commercial and regulatory barriers for its products in international markets. The company explicitly stated that this shift would “open doors to high-margin markets.”

The Kulevi refinery, which commenced operations in October 2025, processed over 650,000 metric tons of crude in the first half of 2026. Its initial annual processing capacity is 1.2 million metric tons, with plans to expand to 4.5 million metric tons in a second phase. The total investment for the project is estimated at $700 million. The refinery is situated adjacent to the Kulevi oil terminal, which is operated by the State Oil Company of the Azerbaijan Republic (SOCAR). Georgia's Foreign Ministry expressed concern over the refinery's inclusion in the sanctions list but affirmed its readiness to cooperate with EU institutions and provide information to ensure that the country is not used to circumvent sanctions.

Looking ahead, Black Sea Petroleum is expanding its partnership with the U.S. technology conglomerate Honeywell for the procurement of equipment and automated control systems. Furthermore, the company plans to commence production of road bitumen in the first quarter of 2027 and aviation fuel in the second quarter of 2027. These initiatives are designed to diversify the refinery's product portfolio and strengthen its position in global energy markets. Markets will continue to closely monitor the Kulevi refinery's complete disengagement from Russian oil and its potential ramifications for regional energy security.