Blackmail or threat? – Vedomosti

On September 21, Russian Prime Minister Mikhail Mishustin signed Resolution No. 1537 “On the introduction of a temporary ban on the export of commercial gasoline and diesel fuel from the Russian Federation.” The next day, prices fell by an average of 11.63%. On September 22, during trading on the St. Petersburg Exchange, the price of a ton of AI-92 decreased by 9.63%, AI-95 by 10.76%, and diesel by 14.52%.

At first glance, the story seems clear and obvious, in some ways even primitive. But this is only at first glance. In reality, this story, like a drop of water in the sea, reflects the entire essence of the Russian oil market – its transmission belts, personalities and motivations of the largest players. Looking ahead, let’s say comprador motivations. And we need to start with the Russian Ministry of Finance.

In the spring of 2023, the head of the Ministry of Finance, Anton Siluanov, announced plans to halve compensation to oil companies for containing prices for petroleum products on the domestic market (fuel damper) from 60 billion to 30 billion rubles. per month. The minister explained his statement by the need to compensate for the situational (as it turned out later) drop in oil budget revenues. Oil revenues from the budget have increased since then, but the damper was nevertheless reduced.

The Ministry of Finance achieved its goal, although all sensible observers warned about the consequences of this decision. The price rally started, and by September 15, the price of the most popular AI-92 on the St. Petersburg Stock Exchange exceeded 70,000 rubles for the first time in the history of the country. per ton. It is clear that there were several reasons for the increase in domestic prices for petroleum products (not only the policy of the Ministry of Finance), but more on this below.

The rise in prices was more than two times higher than the inflation rate, that is, it was absolutely speculative in nature. Ultimately, the president of the country was forced to intervene in the matter. At the Eastern Economic Forum, he said that the government did not respond to rising prices in a timely manner. And it did react on September 21.

Prices began to decline even before Mishustin signed the decree. Already on September 21, only on rumors about the possibility of such a step on the part of the country’s leadership, AI-92 fell in price by 5.74% (to 61,883 rubles/t), AI-95 – by 3.97% (to 66,521 rubles. /t), and diesel fuel – by 2.15% (up to 71,869 rubles /t).

Now about the reasons for rising prices and the motivations of the country’s “oil generals” – the hope and support of Russia. These two issues are directly related; it is impossible to separate them. Let’s start with motivation.

Deputy Prime Minister of the Russian Government Alexander Novak, logically, decided after the government decree to gather the heads of the country’s largest oil companies and talk. The decision is sound, the situation requires explanations and open positions on the part of market operators. Who better than the Deputy Prime Minister for Energy to deal with such issues. Agricultural enterprises in the south of the country (Rostov, Kursk, Belgorod, Crimea, Krasnodar Territory…) were under a price hit; diesel fuel simply disappeared from gas stations.

Our oil workers must be given their due – they came to the meeting with Novak with their visors open (in the sense that everything secret at the meeting became clear). Speaking as openly as the heads of oil companies, they came to the meeting with a single (most likely agreed upon) position – to blackmail the government and intimidate them with the consequences of the decision.

Representative “Gazprom Oil” stated that the ban on exports and the saturation of the domestic market with petroleum products will lead to their shortage. The head of the company, Alexander Dyukov, even publicly stated this on the eve of the decision. There are no exaggerations here. Justified her position “Gazprom Neft» the fact that the export embargo will reduce the efficiency of refineries in Russia and, accordingly, the volume of oil refining by the company will decrease.

A representative of Lukoil “warned” Novak that the ban would force them to stop their refineries in the future. Justification – almost all of Lukoil’s petroleum products are exported via petroleum product pipelines (which is true: Lukoil’s business was initially intended not to supply the country’s domestic market, but to export). The question of why the entire policy of the Russian oil company is aimed at satisfying the demands of external consumers, while internal ones must pay for these ambitions, is not within the competence of the Lukoil management.

The head of Surgutneftegaz, Vladimir Bogdanov, was even more merciless with Novak. He stated that a ban on the export of petroleum products would lead to disruption of Northern deliveries to the Far North. According to eyewitnesses, Novak was literally taken aback by Mr. Bogdanov’s logic, and clarified how restricting exports could reduce supplies to the domestic market.

Really, where is the export? Where is the domestic market? Where is the Northern Delivery? And where are the private companies? In fact, everything is in its place. Russian private business is built not to solve the problems of internal development, all kinds of import substitution and sovereignty, but to transform the country’s natural resources into personal profits. Actually, the “oil generals” openly stated this at a meeting with Novak and tried to intimidate him with this.

More than 80% of the fuel and lubricants produced by Surgutneftegaz are exported. “Lukoil“was originally built for “abroad”, many of whose gas stations do not have diesel today (company managers “complain” about logistics, they say there are not enough trucks, they have a different strategy). U “Gazprom Oil”, by its own admission, the profitability of the refinery directly depends on the volume of exports of petroleum products (the salaries of Gazprom Neft refinery workers are in rubles and are not tied to the export price).

For a final understanding of the motivations of the “domestic” (the quotation marks are not accidental here) oil oligarchs, let us present the sales figures for petroleum products on the St. Petersburg Stock Exchange. For motor gasoline, the share of exchange sales of Lukoil is 13.8% of total production, the share of “Gazprom oil” – 13.3%, “Surgutneftegaz” – 13.1%. For diesel fuel, respectively: 9.4%; 9.2% and 9.7%.

For example, Rosneft’s share in gasoline is 23.5%, and in diesel fuel – 21.8%. If we take the entire volume of petroleum products sold on the exchange (and the price rally began and was accelerated by an increase in wholesale prices on the exchange), then by “Rosneft» gasoline accounts for 39% of all sales, diesel fuel – 40%, and fuel oil – 68%. The figures are based on the sales period from January to August 2023 and to understand the role of oil companies.

If we sum up this whole story, then it is worth noting, first of all, Mikhail Mishustin for his determination (one can only imagine the level of lobbyist pressure) and Alexander Novak for his consistency (he warned about “drastic decisions” and carried them out). As for the comprador nature of the motivations of Russian oligarchs, only the lazy would not trample here.

The Russian press has already “worked out” the meeting with Novak at the proper level. The main point of the publications is that the export embargo will lead to the fact that the domestic market will simply “choke” with surplus petroleum products and production will have to be reduced. In general, “everything is lost, the cast is removed, the client is leaving,” the government, as always, is flogging the fever.

Firstly, there is no surplus of petroleum products on the domestic market. And, secondly, I just want to ask the question: so what? Yes – sales volumes on the domestic market will increase. Yes – prices will go (have already gone) down. Yes – oil companies will have to rebuild their development strategies. What’s bad for the country here? Why didn’t private companies think about the consequences when they exported petroleum products and speculatively drove prices on the stock exchange sky high? Why should state policy be aligned with the interests of private entrepreneurs, and not with the interests of the state and its citizens?

The story of the rise in domestic prices for petroleum products and their immediate rollback as a result of just one decision of the Russian government speaks volumes. Once again we must say thank you to Mikhail Mishustin and Alexander Novak for their consistency and willingness to go to the end. On the Kremlin sign (label) “Lukoil“, Surgutneftegaz or “Gazprom Neft“You can’t hang it. Interests and level of responsibility are different.

One thing is not clear: why, in order to realize the obvious, we once again had to put the country in the position of “Germans near Moscow”? We can only hope that the lesson learned will be learned: private interest cannot be replaced by state interest. It has been adopted not only by the Russian government, but also by its private business.