Russia's main oil buyers will help it with gasoline

Alexey Belogoryev, Research and Development Director of the Institute for Energy and Finance, commented to the Ura.ru internet portal on the measures to stabilize the Russian fuel market, including lowering the share for selling gasoline on the stock exchange from 15% to 10%, extending the fuel damper to imported gasoline, a possible ban on the diesel export, etc.

— Starting from July 1, the standard for mandatory gasoline sales on the stock exchange will be reduced from 15% to 10% of all fuel produced at the refinery. How can this measure help to stabilize the situation in the domestic market?

— This measure is ambiguous. It is assumed that the released 5%, which is about 140-150 thousand tons of gasoline per month, will be distributed for direct supplies to farmers, oil depots and the largest networks of independent gas stations in those regions where the situation is most difficult and where are majority of gas stations not belonging to vertically integrated oil companies. This is primarily the North Caucasus and the south of Russia.

— And how will this affect independent gas stations which purchase gasoline on the wholesale market and do not operate in the regions where these 5% of gasoline will be sent?

— And this is a more complicated question, because, in fact, all the volume that was sold on the stock exchange within the 15% standard eventually went to independent networks — directly or through traders.

The reduction measure to 10% is positioned precisely as a way to combat abuse by traders who allegedly bought gasoline, but did not deliver it to independent tankers or resold it at a huge margin. But with a reduction in the standard, there is a high risk that independent gas stations will not receive the volumes that they used to buy, even at inflated prices from traders. And the total supply for these gas stations is likely to decrease.

— The authorities are discussing a ban on the export of diesel fuel, but so far this measure has not been introduced. Why hasn't it been adopted yet, and when will it become appropriate?

— There is no shortage of diesel fuel in the country from the point of view of the overall balance, and there cannot be, except perhaps for some of the most pessimistic scenarios. Diesel production is almost twice as high as domestic consumption. Yes, it has also decreased now in proportion to the drop in gasoline output, but there is still a huge excess over domestic demand, and this difference is exported.

I do not think that exports will be completely banned, most likely, it will simply be limited if the situation for diesel worsens. But if there is such a deterioration, it will be related not to the general supply of this fuel, but to logistics.

— Gasoline imports, including from non-CIS countries, are considered as one of the measures to stabilize the situation. Stimulating legislative amendments are being adopted for this purpose. How will this work, and where can Russia import fuel from?

— I think the tangible effect of this decision will be no earlier than the middle of July. And the full volume of imports will increase by August. First of all, of course, from Belarus, but sea shipments are also planned. Shipments for the European part of Russia have already begun in Turkey and India, and for the Far East in China. It is difficult to give an accurate forecast of how much gasoline this can add to the Russian market, but probably about 200-250 thousand tons per month. These are large volumes, comparable to the capacity of a large refinery like the Moscow one. For comparison, in May, the total volume of imports from Belarus amounted to 59 thousand tons.

This is a significant support for the market, although it is clear that imports alone will not be able to fix the situation, and much will depend on the further dynamics of production. If we proceed from the scenario that more capacity will not be eliminated, then, in principle, the market can be balanced for a maximum of three to four weeks in all regions, except perhaps the Crimea. But if the capacity outage continues, which is also possible in these realities, and companies do not have time to repair them, the situation will be more complicated.