Russia’s most troubled oil refineries are at risk shutting down, people familiar with the matter said.

The closures could happen as soon as early next year, one source said.

At least three plants have had to dial back or halt production due to steep losses, the report added.

Russia’s oil refining business could see firms shutter as soon as early next year, due to steep losses that have piled up in recent months, people familiar with the matter said last week.

Three Russian refineries — located in Tuapse, Ilsky, and Novoshakhtinsky — were forced to trim their output or pause production at times, five people who worked at the plants told the outlet.

Those cuts have been implemented due to higher borrowing costs, higher oil prices, and losses stemming from export curbs, the people said. The three refineries were also impacted after being hit by Ukrainian drones earlier this year, another factor that hurt production, they added.

Some of the plants could close as soon as early 2025, one of the sources told the outlet.

Tuapse, which refines crude for Russia’s state-run oil giant, Rosneft, has had to stop refining a handful of times this year, the people said. Rosneft did not immediately respond to a request for comment from Business Insider.

Ilksky and Novoshakhtinsky, two smaller, independent refineries, have been processing between 60,000 and 70,000 barrels of oil a day — around half of their regular volume — for several months, due to thin profit margins, the sources said.

Rising oil prices and falling diesel prices in Europe have made it more difficult for refiners to turn a profit. Some refineries have needed to take out debts to stay afloat, the people added, which has scaled costs.

Russia’s central bank raised interest rates to 21% in October, the highest borrowing costs have been in the nation since the start of the Ukraine war.

Losses have been the steepest for smaller, low-tech refining plants, which don’t produce premium fuels, two of the people said. For those firms, losses have trailed as high as 10,000 roubles per metric ton during the second-half of this year.

Falling revenues in Russia’s oil business have been a major hit to the Kremlin’s war chest, given that Russia is one of the largest exporters of crude and refined crude products in the world. The nation’s oil-related revenue dropped 29% year-per-year in October, according to data from Russia’s Finance Ministry.