Flying damper

For the first time since 2020, oil companies can pay to the budget for the supply of gasoline to the domestic market. Thus, due to the decline in Russian oil prices in early December, the damper is approximately minus 1.4 thousand rubles. per ton, however, the diesel fuel damper still allows oilmen to remain in the black. Total payments to oilmen for December from the budget may amount to about 60 billion rubles. According to experts, the transition of the gasoline damper into the negative zone is unlikely to affect gasoline prices, which have fallen significantly this year.

According to the results of December, payments for a gasoline damper may become negative for the first time since 2020. So, according to Kommersant’s interlocutors, a gasoline damper, according to export quotations in the first days of December, could be minus 1.43 thousand rubles. per ton. If we assume that the quotes as of December 5 will remain until the end of the year, the damper may be minus 2 thousand rubles. per ton. As a result, the total payments of oil companies to the budget in December for a gasoline damper may amount to about 6 billion rubles.

The damper mechanism has been in operation since 2019 and is designed to contain fuel prices in the domestic market during sharp fluctuations in oil prices. This mechanism should encourage refineries to supply fuel to the domestic market, for which they receive compensation as part of the difference between the export price and the indicative (fixed) price of the domestic market. If this difference is negative (as may happen in December), then the oil companies have to make payments to the budget. The petrol damper turned negative for the first time in 2020 amid the coronavirus pandemic due to a significant drop in the price of petroleum products in Europe.

In March of this year, the gasoline damper reached a record value of 59.29 thousand rubles. per ton. At the same time, the damper for diesel fuel in December will still remain positive, in the first days of December it was about 14.5 thousand rubles. per ton. Thus, the total payments from the budget for the supply of fuel to the domestic market, according to Kommersant, can be estimated at about 60 billion rubles. The Finance Ministry declined to comment.

The government decided to cut payments on gasoline dampers to oil companies from September: when calculating compensation, the discount of Russian Urals oil to Brent is now taken into account. Analysts at Petromarket believe that the main reason for the damper’s transition into the negative zone is the growth of the discount between Urals and Brent in early December against the backdrop of the EU embargo coming into force. The discount to Urals relative to Brent during the week fluctuated in the range of $26.5-31.5 per barrel, Petromarket notes.

Since the end of February, after the outbreak of hostilities in Ukraine, due to a decrease in demand for Russian oil and petroleum products, the Russian gasoline market was in surplus, which led to a significant drop in the cost of the wholesale price of fuel within the Russian Federation. At the same time, in the context of restrictions on the export of raw materials due to sanctions, Russian oil companies sought to load their refineries to the maximum. Deliveries were stimulated by record damper subsidies this year, which are expected to exceed 2 trillion rubles. for 2022.

It is far from certain that the adoption of a negative value by the gasoline damper will lead to an increase in wholesale prices for the product, since under the scenario under consideration, the corresponding export netback will also decrease in December (relative to the average November value), believes Maria Arie from Petromarket. In this case, the damper will not be a price increase factor.

Dmitry Kozlov