Intensifying Ukrainian drone attacks are forcing Russian companies to find ways to protect their own plants and factories instead of relying on the military, providing an unexpected boost to radar and warfare-equipment producers.
Tender data show that demand for private systems to repel unmanned aerial vehicles, or UAVs, has quadrupled over the past year. At the same time, Russia has managed to at least double output of this sort of equipment since the start of the war, Bloomberg Economics estimates.
“Russia will likely be able to make its refineries and other high-value structures less vulnerable to drone strikes over the coming quarters,” said Russia economist Alex Isakov, of Bloomberg Economics. Much of the ramp up has happened over a period of relatively mild enforcement of trade sanctions, including around the transshipment of electronic components, he added.
Ukraine’s defense against Russia’s invasion has entered a new phase with Kyiv increasingly using homegrown drone technology against some of the country’s most important manufacturers. Russian oil refineries have been hit hardest as Ukraine seeks to cut fuel supplies to the Kremlin’s armed forces and the flow of petrodollars into Russia’s coffers.
Russia was discussing the deployment of military-grade defenses at oil plants, but nothing has been publicly announced yet, though officials have said they’re working with industry to protect these sites. Ukraine has also struck some metals industry facilities, and earlier this month hit a refinery in the Tatarstan region, far from the border with Ukraine.
As the war increasingly spills into Russian territory, private companies are fueling demand for special electronic warfare systems. According to one local electronic procurement platform, Tenderpro, which says it is used by more than 300,000 Russian companies, about a third of all tenders for anti-UAV systems were carried out by oil and gas enterprises. Industrial and mining companies account for 28% and 10% of cases, respectively.
The war has led to “explosive growth” in the electronic warfare market, and production has not yet kept pace with demand, said Andrey Klyuev, chief executive officer of local radar-equipment producer Umirs. “The threat is growing much faster than the manufacturers can handle,” he said, speaking at a conference on anti-UAV technologies in Moscow.
Still, the production of radars and radio remote-control equipment — the statistical category in which anti-drone systems fall — is starting the year with strong momentum. Output increased two-fold in February compared with the same period in 2023, according to the latest Federal Statistics Service data, the second month in a row of skyrocketing growth.
Electronic warfare equipment isn’t invincible against drone attacks, but can significantly limit damage. Those defenses thwarted a strike on the Slavneft plant in Yaroslavl, the sixth largest oil refinery in Russia, which purchased its protective systems from a Rostec State Corp subsidiary. At the same time, the Novoshakhtinsk oil refinery was attacked by drones that were downed by electronic warfare systems, resulting in debris falling onto the property.
Both the Syzran Refinery and the Novokuybyshevsk Refinery, purchased anti-UAV systems in the end of 2022 and beginning of 2023, according to tender data, analyzed by Bloomberg.
According to Bloomberg calculations based on data from available government procurement portals, state-owned companies and government agencies spent at least 1.7 billion rubles ($18.4 million) on electronic security last year. Most of that spending was to protect utilities and energy infrastructure, including a nuclear power plant 200 kilometers (124 miles) from the border with Ukraine.
It’s nearly impossible to estimate how much money Russian corporations have spent on anti-drone protection based on public data, because the procurement announcements are published on various platforms, and Russian authorities allow companies that are targeted by international sanctions to classify their procurement data. According to Tenderpro, the largest single anti-drone equipment purchase amounted to 45 million rubles, while 36% of companies purchase expensive stationary and mobile systems costing more than 1 million rubles ($10,845).
Apart from expensive electronics, companies have also been compelled to invest in constructing physical barriers, strengthening existing structures and insuring themselves against damage. Tenderpro has seen a threefold increase in interest for insuring against drone damage, according to Elena Astafieva, the Moscow-based platform’s commercial director.
Source: Bloomberg
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