The damper is leaking – Newspaper Kommersant No. 148 (7349) of 08/16/2022

According to Kommersant’s information, the Ministry of Finance may take up the suppression of schemes for the export of gasoline and diesel fuel from Russia intended for the domestic market. We are talking about the volumes for which the budget pays subsidies to the oil companies for the damper. Against the background of a significant difference between export and domestic prices and gigantic damper payments, traders began to practice schemes for exporting such fuel.

The Ministry of Finance may take measures to ban the export of gasoline and diesel fuel, for the supply of which the budget has already paid additional subsidies to the refinery for the damper, Kommersant was told in the ministry. “This situation is possible when the damper payment exceeds the amount of excise tax on diesel fuel or gasoline. We will study the issue, assess the economics of export supplies when purchasing fuel on the domestic market with excise tax in June-July, and decide on the need to take action. So far, we do not know about such cases, ”the Ministry of Finance told Kommersant.

According to Kommersant’s interlocutors in the market, in recent months, traders have been actively engaged in buying fuel on the domestic market to sell it for export. In a normal situation, this is unprofitable, since traders would have to buy fuel at the domestic price, which includes excise (not paid when exporting) and VAT (which is compensated when exporting).

However, after the outbreak of hostilities in Ukraine, Russian companies encountered problems in the export of oil and petroleum products. There was a significant surplus of gasoline in the country, and, despite high oil prices, the cost of fuel on the SPIMEX exchange began to decline significantly. According to Reuters, the average wholesale price of gasoline in the Russian Federation in recent months, even including VAT, was about $500 per ton below world quotations, while in January-February the gap was $100-200 per ton.

Also, the economy of exports is seriously affected by the damper – payments that compensate refineries for most of the difference between the price of the domestic market and the export alternative. Now the Russian oil company, in order to sell fuel for export, must offer the buyer a discount to the export quotation, but the damper receives based on this quotation without a discount. As a result, it is profitable for oil companies to supply fuel to the domestic market, but it is desirable that additional volumes do not bring down prices. According to Kommersant’s interlocutors, this causes the interest in exports of traders associated with large fuel producers. In the first half of the year, damper payments to oil companies amounted to 1.4 trillion rubles.

The damper is paid to oilmen for selling fuel to the Russian Federation, and not exporting it. The scheme with the resale of fuel protected by a damper does not correspond to the meaning of the mechanism, but is not expressly prohibited. Reuters described such an operation with gasoline at the beginning of the year. According to Kommersant’s interlocutors in the industry, it is also possible for diesel fuel.

The FAS told Kommersant that they had sent proposals to the government to curb the cost of gasoline and diesel fuel. Among other things, it is proposed to take measures “aimed at stopping the export of fuels if there is demand” within the Russian Federation.

Thus, the FAS proposes “to work out a mechanism in which exports will be carried out without taking into account the damper component.” To curb the rise in prices for winter diesel fuel, the FAS proposes to change the calculation of the damper, calculating it differently in summer and winter periods. The service also considers it necessary to reduce the corridor in the damper for diesel fuel from 20% to 10%, in which the wholesale price may deviate from the indicative price fixed in the Tax Code (with a larger deviation, the damper is reset to zero). At the same time, the FAS wants to increase the standards for the sale of fuel on the stock exchange and recommend that oil companies restore sales volumes to the level of early July – 40,000 tons of gasoline and 51,000 tons of diesel fuel per day. The Ministry of Energy did not comment.

The scale of the scheme with the export of fuel destined for the domestic market is difficult to determine. According to Reuters, in June, the volume of gasoline exported by independent companies from the oil depots of the Russian Federation exceeded 104 thousand tons, or 28% of the total export of this fuel, from March to June – 280 thousand tons (total damper payments for this volume amounted to 10 .5 billion rubles). Starting September 1, the gasoline damper will be seriously reduced, which should lead to higher wholesale gasoline prices and is expected to reduce the attractiveness of the domestic fuel export scheme.

Dmitry Kozlov