There is no diesel — well, don't!

Alexey Belogoryev, Research and Development Director of the Institute for Energy and Finance, commented to the Oil and Capital magazine on the supply of diesel fuel from India to the EU countries.

As Alexey Belogoryev said, it is no longer a question of whether European refineries will find raw materials for their work. It's more a matter of price competition with diesel from India.

"Of course, there are some difficulties with the supply of oil to refineries in the EU countries, especially when it comes to sulfur grades such as Urals. However, in general, there is no acute shortage, because of which the entire industry in Europe should be drained of blood. The problem is not the raw materials, but the motivation. Moreover, it exists not only now, when supplies from India have decreased, and local manufacturers are in no hurry to increase diesel output to compensate for this. The problem has existed for a long time, long before the start of the special military operation and the appearance of an embargo on the supply of Russian petroleum products, which is why the European market is now connected with India.

European refineries cannot withstand price competition with Indian producers, therefore they do not try to take away their market share. In the same way, at one time they could not withstand competition in relation to Russian refineries. It is for this reason that Russia has traditionally sold a lot of diesel to the European Union before 2021," the expert explained.

Alexey Belogoryev stressed that European companies still have a high risk of uncertainty regarding investments in oil refining — both to expand its capacities, and even to restore or modernize existing ones. The reason is the climate policy of almost all EU countries, which is discouraging, and this applies in general to the entire energy sector, including coal and gas generation — not only processing.

The policy of the EU states is aimed, if not at completely curtailing the activities of refineries, then certainly at depriving them of access to investments, despite all the difficulties with the fuel market and the economy of the region as a whole.

"In general, I doubt that the increase in dependence on imports will force the EU to increase its own production of diesel fuel. The ESG agenda prevented it from doing so before the reformatting of the market due to sanctions against Russian hydrocarbons, it will prevent it from doing so now," the expert concluded.