It was decided to ease the embargo on the export of petroleum products, and increase payments to oil workers

As Kommersant expected, following the adjustment of the fuel damper agreed with the Ministry of Finance, the government finally relaxed the ban on pipeline exports of diesel fuel, allowing it to large oil companies. From October, oil workers will again receive full damper payments, which were halved in September, which was one of the reasons for the sharp rise in fuel prices. The export embargo needed to be eased given the fact that Transneft’s storage facilities were full of diesel fuel. Export is allowed if the manufacturer supplies at least 50% of its diesel fuel to the Russian Federation. Of the largest oil companies, Surgutneftegaz, which owns the Kirishi Oil Refinery, did not meet this criterion.

Government 6 October approved measures designed to regulate the situation on the fuel market. Among them are the return of full payments for fuel damper from October 1, and an increase in the requirements for oil producers to sell on the stock exchange to 15% and 12.5% ​​of produced gasoline and diesel fuel, respectively, from November. The government is also introducing a 50 percent protective duty for resellers of petroleum products, which will also apply to refineries engaged in gray exports.

The government urgently agreed on these measures this week, which made it possible to finally ease introduced On September 21, oil workers were banned from exporting fuel, which, due to the overcrowding of Transneft storage facilities with diesel fuel, threatened the refineries with a decrease in oil refining. As a result, the government allowed pipeline export of diesel fuel to the refineries of large oil companies. At the same time, the White House message indicates that they must supply at least 50% of the diesel fuel produced to the domestic market. Not all fuel manufacturers met this criterion.

It is not directly indicated in the relevant resolution, and Kommersant’s interlocutors believe that exceptions are possible.

Thus, according to Victor Katona from Kpler, Surgutnefgaz (owns the Kirishi Oil Refinery with an oil refining capacity of more than 20 million tons per year) in August supplied only 17% of the diesel fuel produced to the domestic market of the Russian Federation, while for LUKOIL this figure was more than 50 %, for Gazprom Neft – more than 80%. Surgutneftegaz was the second largest exporter of diesel fuel from Russia, he notes, so the company will be able to enter foreign markets only if it redirects 220 thousand tons of diesel fuel from export destinations – in fact, a third of its production.

At the same time, exporters who initially already have a large share of the domestic market will most likely export to a greater extent, Mr. Katona believes. Thus, Rosneft (excluding its controlled Bashneft), which directed 70% of its diesel fuel production to the domestic market, will almost certainly export more in the future, the analyst believes.

The circle of refineries that export diesel fuel by pipeline and historically send less than 50% of the produced product to the domestic market also includes Antipinsky (owned by Anatoly Yablonsky’s Rusinvest), Volgogradsky (LUKOIL) and TAIF-NK, Petromarket adds. Together with Kirishi, these four refineries in January-August 2023, according to the agency, sent 25% of the fuel produced to the domestic market, while at the same time, during the same period, these refineries accounted for 56% of the total exports of diesel fuel delivered to seaports by pipeline transport ( amounted to 2.2 million tons, or 65% of total diesel fuel exports from Russia). Removing the restriction on pipe exports looks like a measure that will allow, on the one hand, to remove excess fuel from the country that will never be in demand in Russia, on the other hand, to maintain the Russian market with a surplus for diesel fuel, and, thus, it will not create the preconditions for a significant increase in domestic wholesale prices, noted in Petromarket.

A key measure to stabilize fuel prices, approved on October 6, is the adjustment of the damper – payments from the budget that oil companies receive to curb prices on the domestic market.

The Ministry of Finance has reduced damper payments since September, which was one of the reasons for the sharp increase in wholesale fuel prices. Kommersant’s sources believe that the Ministry of Finance could return full payments for the damper due to additional withdrawals under the mineral extraction tax. Kommersant’s interlocutor in the oil industry confirms this without giving details. According to him, oil companies will win more compensation under the damper than they will pay under the mineral extraction tax. According to Petromarket estimates, if the adopted damper adjustments had been implemented already in September, the national average wholesale prices for AI-92 would have been 23% lower than the actual September level, and diesel fuel – 19%. This, in turn, would create the preconditions for a complete lifting of the ban on the export of motor fuels, they added; September budget expenditures on the damper in this case would amount to about 280 billion rubles. (in September, oil companies lost their damper payments due to domestic wholesale market prices exceeding the maximum permissible level).

Dmitry Kozlov