The Ministry of Energy confirmed the possible restriction of gasoline exports

The Ministry of Energy is ready to propose limiting the export of gasoline and diesel fuel from Russia “depending on the situation in the domestic market of the country.” This was announced on May 24 by Minister Nikolai Shulginov during the Eurasian Economic Forum. “We will monitor and monitor this situation and, if necessary, come up with a proposal that the FAS already, I see, supports, [и] which is aimed at limiting the export of gasoline and diesel fuel,” Shulginov explained (quote from Interfax).

He noted that the ministry cannot ban companies from exporting fuel, but it “gives recommendations to increase supply and reduce exports.” “Retail prices are now stable and we see that the gross margin of filling stations remains at a high level, so we do not expect such a reflection [оптовых цен] at retail,” the minister added.

The Federal Antimonopoly Service (FAS) is also ready to support the restriction of gasoline supplies abroad, “if such a mechanism is proposed,” the head of the department, Maxim Shaskolsky, told Interfax at the forum. “Such a measure can protect the fuel market. We will monitor prices. The Ministry of Energy is responsible for the work of oil companies, if there is an initiative from them, we will support it,” he added.

The head of the FAS stated that retail fuel prices in the domestic market are stable, but exchange quotations have grown. Shaskolsky also recalled that the Federal Antimonopoly Service had previously proposed increasing the mandatory standard for gasoline sales for oil companies to 15% of production (now 12%).

A Vedomosti source familiar with the discussion clarified that the Ministry of Energy had earlier recommended, in order to stabilize the situation on the fuel market, to reduce the export of diesel fuel, suspend the supply of gasoline abroad and increase the mandatory minimum for the sale of gasoline on the SPIMEX commodity exchange. Where and when these proposals were made, he did not say.

Reuters sources reported on May 23 that the Russian government is considering a ban on gasoline exports to prevent fuel shortages in the domestic market and a rise in fuel prices after the decision to cut the fuel damper for refineries. At the same time, on May 16, the Ministry of Energy reported to RIA Novosti that on the eve of the season of repairs at refineries, the companies created gasoline reserves in the amount of 1.9 million tons, “and this is enough.”

Vedomosti sent additional questions to the press service of the Ministry of Energy, the Federal Antimonopoly Service, the office of Deputy Prime Minister Alexander Novak, who oversees the fuel and energy complex, and to the largest oil companies.

The damping mechanism is designed to restrain the growth of fuel prices within the Russian Federation. It assumes that at higher export prices for fuel than in the domestic market (the so-called conditional domestic price is taken as an indicator), refineries receive payments from the budget. In the opposite situation, the oilmen themselves must pay extra to the budget. Last year, refineries received record damper payments of RUB 2.2 trillion, which is 3.2 times more than in 2021. In April 2023, damper payments to oilmen amounted to RUB 107.2 billion.

The proposal to halve payments for the fuel damper from July 2023 to July 2024 was announced at the end of April by Finance Minister Anton Siluanov (the corresponding bill has not yet been submitted to the State Duma). According to him, now payments on the damper “go to the margin of oil refiners,” and adjusting the mechanism will help “correct this situation.” According to Siluanov, it will allow the budget to save up to 30 billion rubles. per month.

The Ministry of Finance is trying to raise additional money for the state budget, the deficit of which for 4 months has already exceeded the planned figures for the whole year. In addition, revenues from the sale of oil and gas were “below expectations” of the Ministry of Finance, Siluanov complained in mid-May. In January-April, the total amount of shortfalls in relation to the base level of income exceeded 400 billion rubles. At the same time, the oil companies have already lost part of the payments under the damper mechanism last year after the Urals discount to Brent was taken into account in the payment formula.

Exchange prices for fuel in Russia in May approached their absolute maximums. The price of a tonne of AI-92 gasoline on the SPIMEX exchange reached 53,202 rubles on May 24, the historical record of September 2021 is 57,515 rubles / ton. The exchange price of AI-95 reached a new high, reaching 61,816 rubles/t. Gasoline quotes on the exchange began to grow from mid-April of this year against the backdrop of the start of the repair season at refineries and reports of another damper adjustment. The cost of a ton of diesel fuel on the stock exchange since the same moment has stabilized at the level of 50,000 – 51,000 rubles. and on May 24 was 51,351 rubles.

Price pressure in the wholesale sector led to some increase in retail prices at gas stations. According to the Moscow Fuel Association, from April 24 to May 22, AI-92 went up by 41 kopecks. up to 48.38 rubles / l, and the most popular among motorists Ai-95 – by 50 kopecks. to 53.58 rubles/l, the price of a diesel engine remained virtually unchanged (58.8 rubles/l). At the same time, the cost of a liter of 92nd gasoline from the beginning of the year to mid-April, according to Rosstat, increased by only 1 kopeck. to 47.19 rubles, the 95th rose in price by 7 kopecks. up to 51.41 rubles. (Vedomosti wrote about this on April 21).

The ban on the export of gasoline from Russia is too harsh a measure that will lead to an overstocking of the domestic market, says Sergey Kaufman, an analyst at FG Finam. In his opinion, the introduction of an export quota is “a more rational option.” The analyst notes that, judging by the growth of wholesale prices on the stock exchange, “the surplus of fuel in the Russian market is either very small or absent.” He also draws attention to the fact that since the end of 2022, the export of Russian gasoline has increased, despite anti-Russian sanctions that limit the ability to supply it abroad. The rapid rise in prices on the exchange, according to Kaufman, is the result of a combination of factors, including repairs at refineries, seasonal growth in demand for motor fuel and a possible adjustment of the damper.

After the strengthening of anti-Russian sanctions in 2022, the Russian oil industry came under pressure. The largest buyer of Russian oil products, the European Union, has imposed an embargo on marine fuel supplies from Russia, which came into force on February 5, 2023. At the same time, a ceiling on prices for oil products from Russia began to operate. $100/bbl cap. applied to more expensive petroleum products (eg gasoline and diesel), $45/bbl. – to cheaper ones (fuel oil). As a result, Russian companies had to rebuild their supply chains in search of new buyers in Asia.

According to the International Energy Agency, in March 2023, fuel exports from Russia reached a historic high of 3.2 million barrels per day, in April the figure fell to 3 million barrels per day.