Gasoline export embargo could disrupt rail logistics

As Kommersant learned, railway operators expect new significant problems with transport flows in Russia due to the ban on gasoline exports introduced on March 1. According to market participants, the reorientation of gasoline volumes from export to the domestic market will increase the delivery time of goods by an average of more than four days and will require additional fleet. Russian Railways does not share these concerns.

The resumption of the ban on gasoline exports could cause additional complications in the market for rail transportation of petroleum products, the Operators Information Center (OIC) told Kommersant. The ban will lead to a reorientation of gasoline transportation to the domestic market.

ISC experts note that car turnover on export routes is significantly lower than on domestic routes (17.6 days versus 21.8), which is explained by the greater technology of export transportation and the high share of route shipments (16% versus 1%). In addition, when delivering to the domestic market, the wagon remains unloaded on average 56% longer than in export transportation. “As a result, one domestic flight requires 4.2 days more time than an export flight,” explains the ICO, adding that sometimes this figure can exceed five days.

At the end of 2023, gasoline accounted for about 17% of oil cargo transportation by rail, 75% of their volume was domestic, and 17% was exported.

ICO experts believe that domestic demand may “not accept the entire flow of exported gasoline,” and the shortage of tanks will not allow exporting the same volume with increased turnover. According to their estimates, the shortage of tanks will lead to the non-export of 3.2 thousand tons of gasoline per day. But even with replenishment of the fleet, the problem cannot be solved, since if the network is clogged, it will only lead to a further increase in car turnover, the ICO believes.

Experts believe it is necessary to increase the priority of domestic gasoline transportation. The transfer of petroleum products and LPG to a higher priority category is currently being discussed, however, according to Kommersant’s information, a decision has not yet been made.

SOZHT Executive Director Igor Sankovsky agrees with the conclusions of the ICO. “We believe that the ban on the export of gasoline will lead to an increase in the turnover of tank cars due to an increase in the transportation time of petroleum products on the domestic market,” he notes, “as less or complete absence of routing will affect a significant number of recipients, as opposed to a limited number of ports.”

The increase in tank car turnover will also be affected by the fact that the minimum sales volumes of diesel fuel at exchange trading have been increased – from 12.5% ​​to 16%, clarifies Mr. Sankovsky. “This means that, according to working estimates, for sales on the domestic market, 0.5 million tons of cargo per year will need to be “removed” from the pipe,” he explains. “And the increase in shipments of petroleum products through exchange trading significantly increases the downtime at unloading.” Up to 75–80% of tanks idle for unloading are tanks with exchange-traded petroleum products, Mr. Sankovsky emphasizes. “Therefore, in general, we can expect a decrease in supply of tanks and an aggravation of their shortage,” he sums up.

JSC Russian Railways, however, does not expect a significant impact of the ban on gasoline exports on the network. “Taking into account the expected reorientation of product supplies to the domestic market, a significant reduction in the network-wide volume of gasoline transportation is not expected after the government of the Russian Federation resumes regulatory measures,” the monopoly says, noting that, for its part, it is taking measures for the unconditional export of the entire volume required for transportation oil cargo.

As JSC Russian Railways believes, the existing fleet of tanks is “more than enough to organize both domestic and export transportation.” “In February, almost 18 thousand oil and gasoline tanks stood idle on non-public tracks without operations every day,” the company notes. The reliability of gasoline delivery for the needs of domestic Russian consumers remains at a consistently high level, they say, this figure reaches 96.5% this year.

At the same time, JSC Russian Railways notes a long period of idle time for tanks in the queue for unloading at oil depots, mainly among enterprises in the south of the country. “In addition, due to delays in the delivery of the tanker fleet, cases of untimely unloading of petroleum products by operators of marine terminals in the Far East are also recorded,” the company says. “This situation leads to the use of wagons by oil companies as “warehouses on wheels,” which also negatively affects to ensure subsequent supply of empty rolling stock for loading.” The Ministry of Energy told Kommersant that they are working to “increase the priority of oil cargo shipments.”

The Russian government renewed the ban on gasoline exports on March 1, while the embargo is expected to last six months. A similar measure was in effect last year from September to November to saturate the domestic fuel market. According to Kommersant, in October 2023 (the only full month of the embargo), gasoline supplies abroad decreased to a minimum of 1.3 thousand tons per day (the embargo did not apply to supply volumes under intergovernmental agreements and to the EAEU countries). For comparison: after the lifting of the ban, gasoline exports in December 2023 were at the level of 15 thousand tons per day, and fuel production was more than 100 thousand tons per day. The current decision to limit exports was made against the background of a decrease in fuel output due to an accident at the Nizhny Novgorod LUKOIL refinery, as well as in anticipation of the start of a repair campaign at the largest plants with a simultaneous seasonal increase in demand. So far, the embargo has not led to a steady decrease in fuel prices: since February 28, AI-95 gasoline in wholesale prices has been rising daily. On March 4, the exchange price of AI-95 increased by 1.4%, to 58.6 thousand rubles. per ton.

In general, oil refining coped with the initial shock caused by accidents and attacks on refineries in January, and by the end of February reached a more or less acceptable load level of 5.35–5.4 million barrels per day, says Victor Katona from Kpler. Apart from several secondary oil refining units, the only large facility that has not yet been put back into operation remains the Tuapse Refinery, he notes.

Natalia Skorlygina, Dmitry Kozlov