The government proposes to consolidate the priority of fuel transportation by rail over other cargo

According to Kommersant, the government proposes to consolidate the priority of fuel transportation by rail compared to other cargo. The measure may be a response to difficulties with the supply of petroleum products against the backdrop of accidents at refineries and slowdowns in traffic on the Russian Railways network. The Ministry of Energy promises to increase the volume of fuel exports through improved planning, but not to the detriment of other cargo.

The government has instructed to ensure “increased priority” for the export of petroleum products by rail in relation to other cargo. According to Kommersant sources, Prime Minister Mikhail Mishustin gave such an instruction to Russian Railways, the Ministry of Energy and the Ministry of Transport following a meeting with deputy prime ministers on March 18. According to the order, by March 21, the departments, together with the monopoly, were to develop a monthly schedule for the export of petroleum products for the period until the end of 2024. The government also demanded to monitor the timely unloading of wagons with petroleum products.

The priority in coordinating cargo is determined by the temporary rules of Russian Railways, according to which the highest priority is given to military cargo, cargo for emergency response, as well as cargo on behalf of the president, including the export of coal from Kuzbass, Khakassia, Tuva, Irkutsk region, Buryatia and Yakutia.

The Ministry of Energy told Kommersant that, in accordance with the government’s instructions, the department, together with oil companies and Russian Railways, “is developing monthly schedules for the transportation of petroleum products, the implementation of which will be monitored by the government as part of a special project of the coordination center under the leadership of Deputy Prime Minister Alexander Novak.” Priority export from the refinery will ensure an increase in production and additionally saturate regional oil depots with fuel during the period of seasonal growth in demand, according to the Ministry of Energy, “this will have a positive effect on the price situation on the market.” An increase in the volume of export of petroleum products will be achieved with an increase in the turnover of the car fleet due to improved planning (including exchange cargo), coordination of actions of oil companies and Russian Railways, the ministry added.

The discussion about increasing the priority of transportation of petroleum products was initiated by oil companies that were dissatisfied with the systematic refusals of Russian Railways to transport fuel, primarily in the eastern direction (Kommersant has repeatedly reported this).

Their main concerns were the risks of overstocking the refineries, which could result in a reduction in fuel output. At the Eastern site, petroleum products directly compete for capacity with export coal, which comes from the Siberian regions as part of the instructions of the President of the Russian Federation. It was unclear from Mikhail Mishustin’s instructions whether the introduction of priority for petroleum products means that they will travel through the Eastern Polygon before coal. The Ministry of Energy, however, reported that “supplies in limiting directions will not be significantly increased – supplies will be carried out within the framework of internal needs.” Increasing the efficiency of the export of petroleum products should not worsen the situation with the export of other goods, the ministry added. The press service of the government and Russian Railways declined to comment.

Introduction export embargo gasoline since March has further complicated the situation with rail shipments, as destroyed conventional logistics models.

The transshipment capacities of consignees cannot cope with the reorientation of fuel, and shippers do not know where to go, says one of Kommersant’s interlocutors. JSC Russian Railways also turned out to be unprepared for the ban: technical plans were not adjusted according to quotas, which limits registration, Kommersant’s interlocutor complains. In his opinion, the monopoly historically does not plan domestic oil transportation and does not respond with conventions to shipments to problem areas, which leads to overstocking of tanks and wagons.

So, back on March 6, in a letter to the Ministry of Energy (Kommersant has it), Surgutneftegaz (owns the Kirishi Oil Refinery in the Leningrad Region) complained that the need to redirect gasoline (at least 6.5 thousand tons per day) leads to faster overstocking and excessive downtime of trains at destination stations. In particular, the oil company supplies fuel to the Moscow region to LUKOIL, which needs additional volumes amid repairs at the Nizhny Novgorod refinery. As a result of the idleness of tanks, a shortage of rolling stock is formed, which leads to the accumulation of excess gasoline reserves at the Kirishi Oil Refinery, explains Surgutneftegaz, fearing a decrease in output at its plant.

The head of Infoline-Analytics, Mikhail Burmistrov, is confident that the increase in priority will not apply to all types of petroleum products – most likely, only to diesel fuel and gasoline.

There is already a tool for prioritizing the transportation of petroleum products for Siberia and the Far East, and now it will apparently be extended to all regions. Mr. Burmistrov believes that this measure is partly preventive in nature. It is due, among other things, to concerns regarding a sufficient supply of fuel in the event of accidents at a number of Russian refineries. In his opinion, it will reduce the potential severity of the problem at the start of the sowing campaign, and can also have a positive impact on the dispatch situation on the network, reducing tank downtime.

Dmitry Kozlov, Natalya Skorlygina