Vice Prime Minister Alexander Novak has suggested the possibility of a partial lifting of the embargo on gasoline exports if signs of oversupply are confirmed. This would apply only to the AI-92 grade. The ban on the export of any gasoline is currently in place until the end of the year.

The Ministry of Energy will soon analyze the possibility of lifting the ban on gasoline exports and submit its proposals on the matter to the government, said Vice Prime Minister Alexander Novak. If signs of oversupply in the market are confirmed, the embargo, which lasts until the end of the year, could be partially lifted—specifically for AI-92 gasoline.

"We've received a proposal (on lifting the export ban. — RBC). I have instructed the Ministry of Energy to work on this issue and submit the necessary proposal," Novak told reporters in the sidelines of the Russian Economic Forum (quoted by RIA Novosti). He explained that the ministry should complete this task "in the near future."

According to Novak, "the discussion is currently only about AI-92 gasoline." "If we confirm the excess and oversupply, we will definitely have to make a decision to allow exports," he added. The Vice Prime Minister clarified that, otherwise, companies might be forced to reduce production volumes.

RBC has sent a request to the Ministry of Energy’s press service.

Signs of Oversupply and Risks In September, Vladimir Bogdanov, head of Surgutneftegaz, suggested the possibility of discussing the cancellation of the export ban in the fall. "Repairs are finished, and as experience from last year shows, by mid-October, we cannot exclude it," he said (quoted by TASS). According to RBC sources, when the embargo was first suspended in spring, this company was also an active proponent of the measure.

At the same time, despite the relative stabilization of market prices, they are still higher than they were at the beginning of June, when gasoline exports were fully resumed. Compared to early summer, the territorial index for AI-92 has risen by 30%, reaching 59,834 rubles per ton, while for AI-95, it has increased by 19%, to 61,777 rubles per ton (up 50% and 43%, respectively, from the beginning of the year). Moreover, since August, according to Rosstat, the accumulated price growth for retail gasoline has outpaced inflation. As of November 5, AI-92 had risen by 7.1% compared to the end of 2023, and AI-95 by 7.6% (with overall consumer prices increasing by 6.75%). However, Deputy Head of the Federal Antimonopoly Service (FAS) Vitaly Korolev assured in early September that retail gasoline prices would not exceed inflation by the end of the year.

Regulators cannot maintain the gasoline export ban for too long, believes Sergey Tereshkin, founder and CEO of the Open Oil Market fuel and raw materials marketplace. "If the ban becomes overly prolonged, oil producers lose incentives for 'good behavior'... A long ban, sooner or later, will result in price increases," he argues. Therefore, the expert believes the authorities are sending a "supportive signal" to the market.

However, accurate data on fuel production volumes is unavailable, as the government closed this data in May. Authorities justified this decision by ensuring information security. In the absence of such data, judging market stability or imbalance relies on indirect signs, says Maxim Dyachenko, managing partner and board member of Proleum (the largest private trader in Russia). "And here the situation is not entirely clear," he notes. First, the volume of gasoline sales on the exchange is currently lower than it was in January or March. This does not correspond to the situation of oversupply. Second, some volumes purchased by companies in mid or late September have yet to be delivered, and producers are extending contracts. While this issue may be related to logistics, Dyachenko acknowledges that fully lifting the export ban could exacerbate it.

"Now, any volume being shipped to oil depots is being purchased while still in transit. So, not only have volumes decreased on the exchange, but also on-site," the expert explains. Additionally, at some supply points, prices for the goods have not fallen even with the resumption of the embargo, he adds. Finally, independent retail operators have been operating at a loss for several months when selling gasoline, Dyachenko reminds. This issue may worsen due to rising interest rates or the risk of price increases upon the resumption of exports. The expert concludes: the fuel market is currently in a balanced, but fragile, state. Therefore, the government may need to consider export quotas and allow exports from refineries facing difficulties due to their location and specifics, he concludes.




Translated using ChatGPT.

Source: https://www.rbc.ru/business/08/11/2024/672e2c9b9a794766ca96f461