In other words, the goal of these agreements is to completely eliminate any hint of a fuel deficit in the country and limit the increase in retail prices. Currently, the volumes of supplies to the domestic market are determined directly by exchange standards and indirectly by export bans. As for retail prices at gas stations, there have been discussions regarding their constraint to levels not exceeding inflation, but this has not been formally enshrined anywhere. Previous agreements between the government and oil companies regarding the fuel market typically existed in the form of gentlemen's agreements, rather than official documents. The main difference with the new agreements is that they are expected to officially enshrine both the ceilings for price growth for gasoline and diesel and the necessary volumes of different types of fuel supply to the domestic market. These agreements just need to be finalized, and the very concept of "agreement" implies that a compromise must be reached between the government and the oil companies, ensuring mutual benefit for the participants.
The purpose of the agreements is to reduce the risk of fuel shortages in the country and limit the growth of retail prices.However, there’s also the possibility that companies might try to present a fait accompli, justifying such a move as a political necessity. Our fuel market is currently influenced by, on one hand, conflicts in the Middle East that are driving up oil and petroleum product prices, and on the other, unforeseen repairs of our oil refineries (OR), related both to drone strikes and difficulties in equipment supplies due to sanctions.
Brokerage quotations for gasoline and diesel remain far from historical highs, but since the beginning of the year, they have risen by 21% and 23%, respectively. The growth in retail prices is more modest, as they are tightly controlled by the Ministry of Energy and FAS, yet the increase in gasoline prices exceeds the inflation level. According to Rosstat, by April 27, AI-92 gasoline had increased by 3.7% while inflation was at 3.2%.
This indicates a basis for stringent decisions. As noted by Dmitry Prokofiev, Director of External Communications at NEFT Research, during his conversation with "RG", this represents a qualitatively different level of intervention. The soft agreements of the past that oil companies often interpreted as “recommendations” are being replaced by legally signed agreements with clear parameters. This is no longer a gentleman's agreement but a full-fledged contract with a set of direct obligations and, importantly, reciprocal proposals from the state. This marks a shift towards direct manual management of the industry, the expert suggests.
This framework aligns with the fact that the government has not extended the moratorium on nullifying the damping mechanism for oil companies. The damping mechanism serves as a partial compensation to oil companies from the budget for supplying fuel to the domestic market at prices below export levels. The size of these payments is calculated based on the difference between the export value of the fuel and the indicative internal price set by law. The damping mechanism is nullified if prices at the St. Petersburg exchange for AI-92 gasoline exceed the indicative price by 20%, and for diesel fuel (DT) by 30%. Since October 1 of last year, this rule has been suspended as a measure to support oil companies amid tightened U.S. sanctions. However, as of May 1 of this year, the rule concerning the nullification of the damping mechanism has come back into effect.
Energy expert Kirill Rodionov believes that the cancellation of the moratorium overall eliminates the "ambiguity" in regulating the fuel market, wherein export bans were supposed to encourage oil companies to restrain market prices, but damping payments had no regard for their actual dynamics.
Experts assert that the measures being taken will help avoid significant price increases at gas stations during periods of high demand.Returning to the agreements, Prokofiev states that the new mechanism constitutes a direct administrative contract. The Ministry of Energy has gained the authority to issue specific quotas for fuel supply to the domestic market (from the total processing volume), while the FAS will oversee their execution.
Obligations should not be one-sided, asserts Dmitry Gusev, Deputy Chairman of the Supervisory Board of the "Reliable Partner" Association and member of the Expert Council for the "Gas Stations of Russia" competition. If there is an obligation to supply a certain quantity of fuel to the domestic market, then there must also be an obligation for someone to purchase it. Oil companies should also be granted some advantages, he believes.
As Prokofiev notes, the government cannot explicitly command refineries how much and to whom to sell, but it has created conditions that are extremely difficult to refuse, according to the expert. In exchange for guaranteed stable sales and a predictable price level, companies receive certain preferences from the government. In return, the Ministry of Energy fixes minimum indicative indicators (quotas) for each refinery’s gasoline and diesel shipments to the domestic market. Essentially, this is market bargaining, only the government is sitting at the negotiating table.
However, what we are primarily interested in is whether this new mechanism will help control price increases at gas stations. Gusev believes that large gas station networks, especially state-owned companies, will keep prices in check. However, he has significant doubts regarding private companies. He emphasizes that it is essential to restrain not just fuel prices, which don’t increase arbitrarily but to establish an energy-efficient fuel policy.
From the perspective of Sergey Tereshkin, General Director of Open Oil Market, the increase in retail gasoline prices will likely exceed the "inflation minus" rule, while in the diesel segment, this rule will be adhered to—at least until fall. Overall, industry regulation heavily relies on "gentlemen's" agreements, which can only ensure temporary effects: the issue of price growth will eventually require new agreements. This is a series that will repeat over and over again.
A similar opinion is held by Prokofiev. The effect will likely be temporary. Such fuel agreements act as a one-time remedy: they alleviate acute pain but do not cure chronic illness. In the long term, this only exacerbates the disparities, making oil refining increasingly dependent on administrative interventions and ultimately hollowing out market incentives for improved efficiency. It is much more profitable for enterprises to secure domestic sales guarantees at fixed prices rather than invest in modernization to compete in the export market. Before us is less an economic measure than a political compromise intended to smooth over peak demand during the season. It will provide relief but will not permanently resolve structural problems. The government and oil companies have found a way to patch up the gaps in the summer fuel balance at the cost of mutual concessions. However, this model, should it become permanent, will only increase the budget's dependency on manual sector management. In a context where stability is prioritized over efficiency, such a choice seems logical, but it certainly does not address the systemic issue of rising fuel prices.
Source: RG.RU
