Page 18 - FSUOGM Week 21

FSUOGM POLICY FSUOGM
Russia bans fuel imports to protect domestic refiners
RUSSIA
RUSSIA’S government has imposed a tem- porary ban on the import of petroleum prod- ucts, to shield its refining sector from cheaper competition.
The ban will be in force until October 1 and will cover supplies of gasoline, diesel, jet fuel and gasoil, “to ensure the energy security of the Rus- sian federation and stabilise the domestic fuel market,” the government said in a decree pub- lished on May 25.
The government has considering a ban since early April, after lockdown measures imposed in Europe caused fuel prices on the continent to collapse. At the same time Russian prices were relatively unchanged because of tax regulation.
Energy Minister Alexander Novak said in late April that the ban would support Russia’s refin- ing industry, which is already under considera- ble strain. Demand for gasoline at Russian filling stations plunged 40-50% in April, the minister
said, as a result of Russia’s own measures to slow the spread of the coronavirus (COVID-19) pan- demic. Diesel and jet fuel consumption, mean- while, fell by 30% and over 50% respectively.
Russian fuel prices have remained compar- atively high as a result of a so-called “damper mechanism” in the country’s oil taxation system. This mechanism compensates producers for sell- ing fuel domestically when oil prices are high. When prices are low, as they are now, producers must pay extra tax on domestic sales, propping up prices.
“The dramatic drop in crude prices has turned the damper mechanism from a subsidy to oil companies into a payment to the govern- ment,” VTB Capital (VTBC) said in a research note back in March.
The decree imposing the ban includes an option for the government to lift it sooner than October if market conditions change. ™
Rosneftegaz cuts Rosneft stake to 40.4%
RUSSIA
The Russian state energy holding is
no longer Rosneft’s majority shareholder.
RUSSIAN state energy holding Rosneftegaz has cut its stake in the country’s largest oil producer Rosneft to 40.4% from its 50% plus one share on March 28, losing its controlling position, Rosneft said in a statement on May 22.
The move comes after Rosneft offloaded its Venezuelan business to a 100% state-owned company, reportedly Roszarubezhneft. This was done in the hope that the US would lift sanctions from two Rosneft subsidiaries accused of trad- ing Venezuelan oil. In return, Rosneft’s whol- ly-owned subsidiary RN-NefteCapitalInvest acquired a 9.6% stake in its parent, apparently from Rosneftegaz.
Rosneft’s other main shareholders BP and the Qatar-owned QH Oil Investments maintain direct shares of 19.75% and 18.93% respectively.
Rosneftegaz also has shares in Russia’s largest gas producer Gazprom, power generation firm Inter RAO, the shipyard Zvezda and other key Russian state companies. Its chairman is Igor
Sechin, the influentional CEO of Rosneft who was reappointed for another five-year term this week.
Rosneftegaz was famously dubbed “Sechin’s piggybank”, for receiving all the state’s dividends while using opaque investment plans to dodge some payments to the state budget.
Roszarubezhneft is also reported to have acquired a stake in RN-Okhrana-Ryazan, the security arm of Rosneft, while the firm’s charter capital has soared to RUB323bn ($4.55bn) from RUB250,000 following its acquisition of Ros- neft's Venezuelan assets.
Rosneft has invested heavily in Venezuela over the years, even as the Latin American coun- try has fallen into economic collapse. It lent bil- lions of dollars to Venezuela's state oil company PDVSA, its partner at a number of projects in the country. PDVSA was reported to be paying Rosneft back in oil exports, which were targeted by US sanctions last year.™
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