6 Oct 2023 16:36

Novak conducting meeting with oil executives - sources

MOSCOW. Oct 6 (Interfax) - Russian Deputy Prime Minister Alexander Novak is holding a regular meeting with oil company executives, several sources familiar with the situation told Interfax.

In the morning, the government approved additional measures to stabilize the domestic fuel market. Among them is the removal of restrictions on the export of diesel fuel delivered to sea ports by pipeline, provided that the producer supplies the domestic market with at least 50% of the produced diesel.

At the same time, a decree was published allowing the delivery of diesel fuel that was registered for export before October 6 or is already being registered and accepted by Transneft for transportation by sea transport, as well as goods "for official use".

However, this and other decrees do not contain information on how the stipulation that 50% of fuel should be delivered to the domestic market is overseen.

To prevent possible "gray" exports after the removal of the current restrictions, a barrier duty on petroleum products was introduced. It will amount to 50,000 per tonne for suppliers of petroleum products, who do not produce them themselves, but buy them on the market for resale. According to the resolution, the barrier duty will be in effect until the end of 2025 and will also apply to resellers of fuel oil, jet fuel, a number of petrochemical products and others.

In addition, it was decided to amend the Tax Code and to reinstate the fuel damper from October 1. However, it is still unclear how these budget expenditures can be compensated - the amendments to the Tax Code have not yet been published.

Furthermore, requirements for oil companies to sell Grade 5 diesel and gasoline in exchange trading have been adjusted. The norms for gasoline sales have been increased from 13% to 15% of production, for diesel - from 9.5% to 12.5%. The new rules will come into effect on November 1.

As reported, since the spring of 2023, Russia's fuel market has been experiencing a price crisis.

At first, the cost of petroleum products on the stock exchange increased for a long time without stopping. The initial reason for the rise in quotations was the decision to cut fuel damper payments to companies by half in September. In summer, when consumption was at its peak, the market began to face logistical problems, followed by a sharp weakening of the ruble, as well as a rise in world prices for oil and petroleum products, which made exports much more profitable than supplies to the domestic market. As a result of the concentration of these factors, as well as other reasons, exchange prices for gasoline and diesel broke all records.

Prices at filling stations in Russia then began to rise. At the end of August, the situation was aggravated by complaints from farmers completing harvesting and preparing for winter sowing. Farmers complained about the rapidly rising cost of diesel fuel and shortages of fuel and lubricants in some regions. Statements by officials trying to solve the fuel price crisis did not have a positive effect on exchange prices, and in September they only accelerated their growth.

As a result, the government decided to take a drastic measure and on September 21 imposed a ban on the export of gasoline and diesel fuel from Russia. Exchange prices fell sharply. Government representatives began to say that the decrease in exchange prices should be felt by small wholesale, farmers and at filling stations. Deputy Prime Minister Alexander Novak introduced the practice of regular meetings on fuel market problems with oil companies and agencies. The Federal Antimonopoly Service has launched a campaign of control and supervisory actions against market participants.

The issue of fuel problems was raised several times at meetings led by Russian President Vladimir Putin, who stressed that the same mechanism could be used as with fertilizers: if you have provided for the domestic market, you can export. Putin also instructed Novak to work more closely with oil companies so that they understand their responsibility for the situation.