Page 16 - FSUOGM Week 28 2020

FSUOGM POLICY FSUOGM
Russian fuel suppliers to increase fuel sales on the open market
RUSSIA
The move is aimed at safeguarding against shortages, particularly among independent lling station chains.
RUSSIAN fuel suppliers may have to bolster fuel sales on the open market, Kommersant reported on July 9. e move is reportedly aimed at safe- guarding against shortages, following a sharp recovery in fuel demand as measures to slow the spread of the coronavirus (COVID-19) have been li ed.
According to the newspaper, the Russian Energy Ministry and the Federal Antimonop- oly Service (FAS) have both agreed that more fuel needs to be directed to the exchanges. But the two sides are yet to decide on how great the increase should be.
Major fuel suppliers Rosneft, Lukoil and Gazprom Ne are currently required to sell at least 10% of the gasoline and 6% of diesel on exchanges, namely the St Petersburg Interna- tional Mercantile Exchange (SPIMEX). Criti- cally, this guarantees that independent retailers have access to supply, even if they do not have long-term contracts in place. e majors can face nes for violating these competition rules.
Demand for gasoline picked up signi cantly during May and June, as Russia loosened travel and other restrictions imposed to combat the pandemic. This has triggered a sharp rise in wholesale fuel prices.
e price of AI-92 gasoline at SPIMEX in May shot up 23.6% to RUB49,600 ($700) per tonne, while the cost of AI-95 grade soared 27.4% to RUB51,900. In the week ending July 5, the price of AI-95 reached an all-time high of over RUB62,000.
In response, the FAS has called for the min- imum quotas to be raised to 15% for gasoline
and 9% for diesel. e energy ministry, however, wants to increase the quotas to only 11% and 7%. Gazprom Ne and Lukoil may struggle to meet such requirements without scaling back supplies to their own large lling station networks. is could even lead to these companies buying back their own fuel on the open market.
Rosne does not face this problem, as the company already sells more over 20% of its oil products on the exchange. Analysts and industry players have suggested that smaller fuel suppliers such as TAIF, Taneko, ForteInvest and Antipin- sky could be ordered to sell some volumes on the exchange as well, to ease pressure on the majors.
Independent lling station operators have been lobbying for more fuel to become available on the open market. ey recently held a meet- ing with the energy ministry, warning that the situation was critical and many of them were operating at a loss.
Russian refining throughput slumped by 400,000 barrels per day month on month in May, and by 255,000 bpd year on year, according to the International Energy Agency (IEA). is was because of scheduled maintenance or cuts in response to COVID-19 lockdowns in major cities.
Despite the sharp increases in wholesale prices, pump prices in Russia have changed lit- tle since lockdown measures were ended, rising less than in ation. is is because of the damper e ect – a tax mechanism introduced by Russia in 2018 to prevent sharp rises in prices. is mech- anism means oil rms pay extra into the budgets when prices are higher than export netbacks.™
P16
w w w . N E W S B A S E . c o m Week 28 15•July•2020