The Ministry of Energy requested information from oil and gas companies on the production and supply of fuel abroad

As Kommersant found out, against the backdrop of plans to limit the number of fuel exporters, the Ministry of Energy requested information from oil and gas companies on the production and supply of fuel abroad. Letters were sent to 70 enterprises – from the largest oil companies to small refineries – as part of the study of the issue of suppressing gray exports. However, the restriction of exports in one form or another has been discussed for two months, but so far the government has limited itself to verbal interventions and has not taken practical steps.

The Ministry of Energy sent a request to oil and gas companies to provide information on the volume of production and export of petroleum products and liquefied hydrocarbon gas (LHG) “as part of the study of the issue of restricting gray exports.” The letter (Kommersant has a copy) was sent on August 31 by First Deputy Energy Minister Pavel Sorokin to 70 companies. The mailing list included both key industry players – Rosneft, Gazprom, Gazprom Neft, LUKOIL, SIBUR, NOVATEK, Surgutneftegaz, Tatneft, NNK, INK, Russneft – and independent refineries, including those who do not produce marketable products.

According to the appeal of the Ministry of Energy, by September 6, oil product producers, including their subsidiaries (affiliates), must provide information on the production of fifth grade gasoline and diesel fuel for six months of 2023, as well as the export volumes of these fuels and LPG for this period and 2022. In addition, companies are invited to disclose the amount of tax deductions from 2020 to mid-2023. The Ministry of Energy told Kommersant that “gray exports damage not only the budget, but also all consumers of petroleum products in the country.” “A decision has been made to limit it, we expect that the measures will come into force in the near future,” they added.

Gray export, which is considered one of the reasons for the sharp rise in fuel prices this summer, refers to the supply of petroleum products abroad intended for the domestic market, for which oil companies have already received budget subsidies – a damper. Market participants believe that small and medium-sized refineries are now engaged in such exports, which are trying to earn money in an environment where export prices for petroleum products are much higher than domestic ones. As a rule, we are talking about refineries that do not produce marketable products themselves. The Ministry of Energy has been preparing a draft decree on limiting gray exports for some time and, as Kommersant reported, proposed limiting the number of exporters for this.

Although the list of special exporters has not yet been formed, last week Russian Deputy Prime Minister Alexander Novak promised to approve it in the near future. “A list of special exporters will be adopted to limit gray exports. Literally soon,” he said on August 30.

In August, the Ministry of Energy announced that it had formed criteria for approving the list of special exporters. According to Kommersant, oil companies were against the government approving the list of special exporters, since in this case it must be published by law – this, according to some companies, meant the threat of sanctions for the players on the list. As an alternative, the option of licensing exports was proposed, while only companies that meet certain criteria (primarily the production of fifth grade fuel) would be able to obtain a license. The list of licensed companies may not be published.

Requesting information from market participants is a standard procedure for departments when exercising control, developing proposals for changing regulation, said Sergey Kondratiev from the Institute of Energy and Finance. However, he recalls that the Ministry of Energy already receives data on production and export shipments from the Central Distribution Department of the Fuel and Energy Complex, and data on tax collections can be obtained from the Federal Customs Service and the Federal Tax Service. “I won’t be surprised if, as a result, the Ministry of Energy will limit itself to verbal suggestions to companies,” the expert believes. “If the authorities are ready to take tough measures, the collected data could be used, for example, for direct export quotas.”

Dmitry Kozlov