27 Dec 2022 13:51

Russian MinFin not yet planning more fuel damper adjustments

MOSCOW. Dec 27 (Interfax) - The Russian Finance Ministry is not yet planning more changes to the fuel damper, Finance Minister Anton Siluanov told reporters.

"We have made adjustments to the damper, bearing in mind that it will be calculated not from the price of Brent, but from the price of Urals, such adjustments have been extended for the next three years. It's just probably wrong to just say now that we will not pay the oil companies for the damper. This is a measure aimed at stabilizing prices and supply of petroleum products on the domestic market," he said.

"You could say foreign markets are limited, nothing can be done about it, but here, after all, agreements are more important. We cannot make one decision if the wind blows one way, and another if it blows the other way. Now the refining margin has increased. We do not plan any innovations for calculating the damper compared to those that were adopted, which I just mentioned to clarify the price bar," he said.

An adjusted gasoline damper came into effect on September 1, 2022. The adjustment brings the indicative export price of gasoline in the damper formula closer to the real price of Russian gasoline in Europe. The adjusted formula implies that the average monthly discount to Brent for Urals crude is deducted from the average price of gasoline in Europe. As a result, the indicative export price in the damper formula will take into account not only the product price in Europe and the cost of delivering Russian product to the European market, but also the real discount at which it is sold there.

This formula for calculating the damper will be in effect for three years. The diesel damper was not adjusted.

Adjusting the fuel damper is a traditional solution for ministries in times of crisis. In the past, regulators have taken measures to stabilize the fuel market, which have included adjusting fuel damper parameters, due to price growth for petroleum products on the stock exchange, which has reduced the margin at filling station networks to a critical level. The previous such revision dates to the spring of 2021.

The fuel damper has been in effect in Russia since 2019 and is the difference between the export price of fuel and the indicative domestic price, specified by law. The state pays oil companies if this difference is positive, and exports become more profitable than deliveries to the domestic market, while oil companies pay the state if the difference is negative.