Page 91 - RusRPTApr19

speaking about the Nord Stream-2 decision as well,” Stathakis said.
Russian oil majors lost about RUB55bn ($0.8bn) since the beginning of 2019 by supplying oil products and motor fuel to the domestic rather than the foreign market, Vedomosti daily said on March 7 citing the calculations of Vygon Consulting. At the upcoming meeting with the Deputy PM Dmitry Kozak on March 7 the oilmen will again plead to revise the compensations for supplying oil products to the domestic market, seen as inefficient, unnamed sources told the daily. Throughout 2018 largest Russian oil companies were actively negotiating the parameters of the government’s proposed "tax manoeuvre" fiscal reform in the oil and gas sector. An increase in the excise tax on oil products was debated, as well as logistics coefficients for the negative excise (for refineries located far from the border) and the floating excise rates. The fiscal reform in the oil and gas sector suggests full cancellation of the export duty tax by 2024, and its replacement with the mineral extraction tax (MET) and has previously been viewed as negative for the sector by analysts. Currently about 60% of the difference between the export prices and reference domestic price will be compensated by the budget in an effort to compensate domestic motor fuel sales. RUB124bn is planned for such compensations for 2019. However, actual fuel prices in January 2019 were lower than the reference peg and petrol producers had in effect to pay the budget RUB10bn in January and RUB4.7bn in February. Diesel fuel producers, in turn, got about 20% compensations instead of planned 60%. "The new system of downstream taxation has become so complicated, that one can untangle it only retroactively," Dmitry Marinchenko of Fitch Ratings told Vedomosti, confirming that fixed reference price peg could likely cause profit fallout for the market players. Direct state interventions on the domestic fuel market add to regulatory uncertainties. In November 2018 amid ongoing concerns over high gasoline prices Russian oil companies agreed to lower the wholesale gasoline and diesel prices and then freeze them until the end of 2018.
The US could beat Russia's oil exports numbers by 2024 and become the world's second largest exporter of oil behind the Saudi Arabia, the report by the International Energy Agency (IEA) forecasts. "The United States continues to dominate supply growth in the medium term. Following the unprecedented expansion seen in 2018, when total liquids production increased by a record 2.2mn barrels per day (mb/d), the United States will account for 70% of the increase in global production capacity until 2024, adding a total of 4mb/d," the report reads. As a result, the US will become a net oil exporter in 2021, with exports reaching 9mb/d, overtaking Russia and catching up on Saudi Arabia, the IEA believes, noting that "the transformation of the United States into a major exporter is another consequence of its shale revolution." Another emerging global oil players are Brazil, seen shipping an extra 0.8mb/d of oil by 2024, and Norway, which is seen overtaking Kazakhstan and Kuwait in the next five years in terms of oil exports. In the meantime, the upstream segment will see major changes as well. The refining industry is facing a wave of new capacity additions in the period to 2024, with a net growth of about 9mb/d, the IEA believes. China will overtake the United States to become the global leader in installed refining capacity. "Given that these new additions far exceed the increase in demand for refined products, plant closures might be necessary to rebalance the market, though questions remain as to where and when that will happen," the agency warns.
Russia’s oil companies are ready to cut production until July as part of the global deal between OPEC and non-OPEC producers, TASS news
91 RUSSIA Country Report April 2019 www.intellinews.com