In Russia, the demand for AI-95 gasoline is growing faster than its production, and the share of AI-95 sales on the exchange does not correspond to consumption. As a result, the exchange prices for AI-95 are rising at a faster pace (74,997 rubles per ton) and are now almost reaching the maximum level of last year's autumn crisis (76,797 rubles per ton). This is stated in a letter fr om the Russian Fuel Union (RTS) to Deputy Prime Minister Alexander Novak (a copy of the letter is available to "RG").

The letter from RTS says that despite the growth in the production of AI-95 (and higher) gasoline, which already accounts for 45% of the total gasoline production of class 5, the consumption of these grades is also increasing and now averages 57% across the country. The ratio of AI-92 and AI-95 exchange sales is also unfavorable to the latter grade: in May - 58.8% and 41.2%, in June - 59.2% and 40.8%, in July - 57.6% and 42.4%.

Currently, the price difference between AI-95 and AI-92 is 18,000 rubles. At the beginning of the year, the spread between the grades was just under 3,000 rubles per ton. The main hopes of curbing the growth of AI-95 exchange prices are placed on the resumption of the ban on gasoline exports in August. However, export bans are always a last resort, and they are short-term and do not resolve the industry's issues.

The problem here is clear – the shortage of AI-95 production. The reasons why production is not growing as fast as needed can be numerous, and they all affect the market.

Firstly, the production of high-octane gasoline requires additives. The most commonly used additive is methyl tert-butyl ether (MTBE), which is added to gasoline to increase its octane number and improve combustion quality.

As noted by Dmitry Gusev, Deputy Chairman of the Supervisory Board of the "Reliable Partner" association, the key issue lies in secondary refining processes and the cost of additives, particularly MTBE. It is likely that there is a shortage of this additive to increase the production of high-octane gasoline. Perhaps it is worth reviewing some of the requirements, allowing or introducing new additives, and making MTBE sales transparent by bringing them to the exchange.

The main producer of MTBE in Russia is "SIBUR." The company commented to "RG" on the situation, denying a shortage of MTBE in the market. "There is no shortage of octane-enhancing components. The company's existing capacities are sufficient to supply the market with enough MTBE. During periods of low demand for automotive gasoline, a persistent surplus of MTBE may occur in Russia," said the company.

They also emphasized that the production volumes of MTBE are increasing every year. This year, the company increased production by 30,000 tons compared to last year, to 400,000 tons per year. Other producers are also actively increasing their output. Regarding the cost of MTBE, it is determined by the macroeconomic indicators of the fuel market in Russia. The spot price of MTBE in 2023 decreased by almost 10% compared to 2022, and in 2024, there has been a slight increase in the price compared to last year, the company explained.

The issue of expanding the list of allowed additives has been raised multiple times. For example, there were discussions about allowing the use of monomethylaniline (MMA). It was used in Russian oil refining until 2016 but was banned by the Ministry of Energy due to its negative impact on gasoline quality, vehicle components, and the environment, explains Dmitry Semagin, head of the RUPEC Information and Analytical Center.

In his opinion, allowing MMA would not resolve the issue with AI-95. In the case of additives that increase the octane number of gasoline, there is effectively no shortage in Russia. It’s about partially replacing one existing product with another. Moreover, the return of MMA would increase the likelihood of counterfeit gasoline being produced by small refineries using dubious technologies.

The second reason for the sharp rise in AI-95 exchange prices may be related to the rules for payments under the fuel damper program. The damper compensates part of the difference between the fuel's indicative price, set by the state, and its export price. It is paid from the budget to oil producers for wholesale supplies of fuel to the domestic market, with deviations from the indicative price (on average per month) of no more than 10% for gasoline and no more than 20% for diesel. For gasoline, only the price of AI-92 is considered in the calculations.

As noted by Sergey Tereshkin, CEO of the OPEN OIL MARKET fuel and raw material marketplace, the fact that the AI-95 exchange price is not included in the damper calculations gives oil producers the opportunity to increase their refining margin without the risk of losing subsidies. This explains the more than 20% difference in the exchange price of AI-92 and AI-95 that has emerged now.

According to Gusev, it would make sense to separate damper payments for AI-92 and AI-95. The main problems are with AI-95, which are more significant than with all other motor fuels combined.

Tereshkin agrees with this. From a formal perspective, including AI-95 in the calculation of damper payments could halt the rise in prices. However, the problem is that oil producers need to somehow compensate for the cost increases the industry has faced this year. According to Rosstat, the balance of profits and losses for Russian oil product producers in the first four months of 2024 decreased by 14.7% compared to the same period in 2023 (to 1,217 billion rubles), the expert noted.

In the letter, RTS also proposes separating the mandatory sales volume requirements on the exchange for different grades of gasoline (currently, there are requirements for gasoline as a whole). However, according to Gusev, this could lead to a situation wh ere AI-95 will be traded on the exchange in volumes strictly according to the norm, while AI-92 will be traded in much larger volumes. The imbalance will persist.

Additionally, one of the reasons production of AI-95 does not keep up with growing demand and why exchange prices for it are soaring is due to the consequences of unplanned repairs at Russian oil refineries (NPS) caused by issues with replacing foreign equipment and drone attacks. For example, the Nizhny Novgorod NPS specialized in the production of high-octane gasoline.


Translated using ChatGPT


Sourse:  https://rg.ru/2024/07/23/pochemu-benzin-ai-95-dorozhaet-silnee-ostalnyh.html