Page 18 - FSUOGM Week 32

FSUOGM PERFORMANCE FSUOGM

Russian wholesale gasoline prices

slide back from record highs

GASOLINE prices on Russia’s St Petersburg turn a profit.
International Mercantile Exchange (SPIMEX) While the wholesale market has been vola-
have slid back since reaching record highs in July, tile, pump prices have been stable throughout
thanks to an increase in fuel supply. the crisis because of the so-called damper tax
Wholesale fuel prices soared last month, fol- mechanism introduced last year. This mecha-
lowing a faster-than-anticipated rebound in fuel nism requires fuel suppliers to pay extra into the
demand after coronavirus (COVID-19) restric- budget when domestic oil products are higher
tions were eased. The speed of the recovery took than export netbacks, but allows them to collect
some refiners by surprise. a subsidy when the situation is reversed.
The cost of 95 gasoline has averaged Besides increased fuel production, refiners
RUB50,500 ($686) per tonne so far this month, have also been ordered by the government to
down 15% from highs in July, whereas 92 gas- divert more supplies to the domestic wholesale
oline now costs RUB49,200, down 5%, Kom- market in order to bring down prices.
mersant reported on August 10. Prices are now In a research note on August 10, VTB Capi-
approaching their level at the end of May, the tal (VTBC) noted that the decline in wholesale
newspaper said. prices had shifted the profitability of the oil
The spike in prices last month meant that majors from refining to the fuel retail segment.
gasoline was selling on the Russian wholesale Retail margins have averaged $84 per tonne so
market at a significant premium to export prices. far this month, the bank estimated, versus $66
That premium has now shrunk, thanks to rising per tonne in July.
refining throughput. However, VTBC noted that despite the
High wholesale prices created problems for wholesale price decline, refineries’ domestic
independent fuel retailers, who complained in sales were still more profitable than export sales,
late July that these prices had reached parity with meaning they will continue paying the damper
pump prices, making it impossible for them to tax. ™

Lukoil output slumps in Q2 on OPEC+

cuts, weaker Uzbek gas sales

RUSSIA RUSSIA’S biggest independent oil and gas pro- new OPEC+ deal, from a 10mn bpd baseline
ducer Lukoil suffered a 17.3% year-on-year level.
Uzbek gas sales to decline in output in the second quarter, on the Lukoil pointed to growth at several key West-
China slumped due to back of OPEC+ cuts and weaker Uzbek gas sales ern Siberian projects, however, including the
coronavirus lockdowns. to China. Vinogradov, Imilorskoye, Sredne-Nazymskoye
Hydrocarbon production averaged 1.981mn and Pyakyakhinskoye fields. It also boosted
barrels of oil equivalent per day in the three high-viscosity oil output at the Yaregskoye and
months ending June 30, versus 2.324mn boepd Usinskoye deposits.
a year earlier. This excludes contributions from Lukoil produced some 6.4bn cubic metres of
Iraq’s West Qurna-2 project. gas in the second quarter, marking a 24% decline
Output during the first half of the year was y/y. First-half output was 14.8 bcm, down 15%
more stable, falling only 8.3% y/y to 2.155mn y/y.
boepd. The company blamed these results on a
Oil extraction came to 18.82mn tonnes slowdown in Chinese gas demand. Chinese gas
(1.52mn bpd) in the second quarter excluding consumption has grown at a much slower rate
West Qurna-2 volumes, down 12% y/y. First- this year as a result of coronavirus (COVID-19)
half output was down 5.6% at 40.2mn tonnes lockdowns imposed early on in the year. Chinese
(1.62mn bpd). These declines were driven by companies have prioritised domestic supply
reductions in Russia, which agreed to slash its while cutting back on imports, including from
oil output to 8.5mn bpd in April under the Lukoil’s Southwest Gissar and Kandym projects

P18 www. NEWSBASE .com Week 32 12•August•2020