Page 16 - FSUOGM Week 30

FSUOGM POLICY FSUOGM

Independent Russian fuel retailers irked

by sky-high wholesale prices

RUSSIA THE Russian Fuel Union (RFU), an association introduced last year. This mechanism requires
for independent fuel retailers, has filed a com- fuel suppliers to pay extra into the budget when
The tax mechanism has plaint with antitrust regulators about the high domestic oil products are higher than export net-
meanwhile kept pump wholesale costs of gasoline and diesel. backs, but allows them to collect a subsidy when
prices low. Wholesale fuel prices have reached record the situation is the other way around.
highs over the recent months, following a fast- If independent retailers do jack up prices,
er-than-anticipated recovery in fuel demand they make their fuel uncompetitive, Arkusha
after coronavirus COVID-19 restrictions were explained.
eased. But pump prices have remained stub- Fuel prices on the St Petersburg Mercantile
bornly flat over the same period, because of a Stock Exchange (SPIMEX) set new records
tax mechanism put in place to prevent sudden almost every day in July, with the cost of AI-95
spikes in costs to motorists. gasoline reaching RUB60,000 ($837) per
The situation has become critical, RFU head tonne. The cost of AI-92 gasoline surged to
Yevgeny Arkusha wrote in a letter to the head of the RUB51,000.
Federal Antimonopoly Service (FAS), Igor Arte- Retail prices have also risen but their growth
myev. Wholesale prices for gasoline have reached has been below the rate of inflation.
parity with pump prices, and in some regions have FAS and the Russian energy ministry ear-
even exceeded them, he said. This puts independ- lier sought to halt the advance in wholesale fuel
ent retailers in a very difficult spot, unable to cover prices by ordering suppliers to sell more of their
their operating costs, let alone taxes. fuel on the open market. Instead of selling 10% of
While independent retailers are free to raise their gasoline and 6% of their diesel, refiners will
their pump prices, integrated oil companies such now have to sell 11% and 7.5% respectively. The
as Lukoil, Rosneft and Gazprom Neft are unable to quotas will also apply to all refiners rather than
do so, owing to the so-called damper mechanism just the major ones. ™
PROJECTS & COMPANIES

Gazprom Neft, Rosneft come up with

"unique" APG solution in Arctic

RUSSIA RUSSIAN oil firms Gazprom Neft and Rosneft East-Messoyakhskoye’s gas is used to generate
have developed a “unique” solution for utilising heat and power at the site, Gazprom Neft and
APG produced at the associated petroleum gas (APG) in the Russian Rosneft have had to store most of it to reach the
East-Messoyakhskoye Arctic, Gazprom Neft said on July 27. 95% target. The pair began work on the storage
field will be stored The pair’s joint venture has begun storing facilities two years ago.
at the nearby West- APG produced at the East-Messoyakhskoye In a statement, Gazprom Neft’s deputy CEO
Messoyakhskoye field in Western Siberia’s Yamalo-Nenets region for exploration and production, Vadim Yakov-
deposit. at the nearby undeveloped West-Messoyakh- lev, noted that the storage project was the first of
skoye field, for future use. The gas is run through its kind in Russia. He said the company, which
a 1.5bn cubic metre per year compressor station has traditionally prioritised oil, wanted to build
and then pumped via a 47-km pipeline. The pro- up its gas operations as well. Its main focus is gas
ject also consists of nine wells for injecting associ- at Arctic projects. Yakovlev estimated that the
ated gas into West-Messoyakhskoye’s reservoirs. share of gas in Gazprom Neft’s overall hydrocar-
East-Messoyakhskoye began commercial bon production would reach 45% by 2026.
production in 2015 and flowed over 5.6mn Gazprom Neft made considerable progress in
tonnes of oil equivalent (112,000 barrels of oil utilising its APG last year, increasing the rate to
equivalent per day, boepd) last year. Most this 89% from 78% in 2018. In its latest annual report
volume is oil, which is pumped to markets via it said it expected to reach the 95% target in 2022.
the Zapolyarye-Purpe pipeline. But the field Rosneft’s utilisation rate, on the other hand,
also has gas, but this is stranded because of its stands at only 77.8%. Russia is the world’s biggest
remoteness to Russia's gas transport system. gas flarer, burning off 23.2 bcm of gas last year,
Russian law states that producers must according to a World Bank study. It accounts for
utilise 95% of their APG. While some of 9% of global gas flaring. ™

P16 www. NEWSBASE .com Week 30 29•July•2020