Russia postpones adjustment of fuel damper by at least a month

MOSCOW. March 16 (Interfax) - Consideration of a bill to increase the damper for oil products will be postponed for a month, the Finance Ministry told Interfax.

"Consideration of the bill on increasing the amount of the damper for oil products has been deferred by a month at this point. Subsequently, the decision will be made based on the situation," a ministry spokesman said.

Project lead at research group Petromarket Anna Lishnevetskaya told Interfax that if prices for oil products in northwestern Europe, as well as the U.S. dollar's exchange rate against the ruble hold at the March 11 until the end of the month, the gasoline and diesel fuel dampers in March will increase to record highs of 68,710 rubles/tonne and 69,180 rubles/tonne, respectively.

If product supplies from oil refineries to the domestic market remain at the level they were at in the first eight days of March, damper payouts to oil companies from the federal budget could reach 480 billion rubles, or about 70% of the fuel damper payouts in all of 2021, she said.

Russia introduced the dampening mechanism for oil products in 2019. It is calculated as the difference between the export price of fuel and the indicative domestic price, set by legislation. If this difference is positive and exports become more lucrative than deliveries to the domestic market, the government pays oil companies, and if the difference is negative oil companies pay the government.