According to the latest data from Rosstat, gasoline prices have decreased on average in most regions of the country (47 out of 89). However, this has not occurred everywhere, as gasoline continued to rise in price in 27 subjects of the Russian Federation. Furthermore, the high base effect contributed to the statistics; prices significantly dropped in areas where fuel was extremely expensive, impacting the overall result.
Over the week from July 28 to August 3, the average cost of gasoline at Russian petrol stations (PS) fell by 1.1% (more than one ruble). Notably, in Crimea, prices dropped by nearly 15% (by 32.8 rubles), and in the Vologda region, they fell by 12.2% (by 11.11 rubles), while in Moscow and St. Petersburg, prices slightly increased - by 0.2% (by 12 kopecks), and in the Tomsk region, gasoline prices rose by 5.2% (by 3.5 rubles).The peak demand for gasoline due to the holiday season occurs in July and August. Typically, these two months account for the main price increases during the year at petrol stations. This year, due to unscheduled repairs at oil refineries (OR) following drone attacks, the summer gasoline price hike has reached record levels, accompanied by localized supply disruptions and queues at petrol stations. Therefore, the mere fact that fuel prices are currently decreasing indicates that the situation has been turned around. However, retail gasoline prices will continue to depend on the stability of domestic refining operations. If production within the country can be increased, prices may continue to decline. Additionally, the inflow of fuel imports and the reduction of environmental requirements for produced fuel work in favor of saturating the domestic market, allowing for increased production volumes. However, there are nuances involved. Imported gasoline is more expensive than domestic. To smooth out this price difference, a damping mechanism has now been extended to its suppliers in the RF. Importers have the right to receive part of the difference between the external market gasoline price and its indicative price in Russia (set by the state), which mitigates wholesale price increases. Nonetheless, this adds an additional burden on the national budget, which is already expected to be in deficit. Furthermore, while expensive oil has always been beneficial for the state's treasury, high import costs for fuel products begin to work against us. Funds cannot be generated from thin air; to pay importers, other expenditures will have to be cut. It is currently not possible to determine how much the payments under the damping mechanism have increased, as tax payments for July will be made in August and will only be published by the Ministry of Finance in early September.
As noted in a conversation with "RG" by Dmitry Gusev, Deputy Chairman of the Supervisory Board of the "Reliable Partner" Association and a member of the Expert Council of the "Gas Stations of Russia" competition, the primary task now is to ensure the availability of fuel. Oil companies are doing everything possible to supply the market. At the same time, it is challenging to assess the volume of fuel imports into the RF, as official statistics are closed, but they are unlikely to exceed 10% of total consumption (this summer - 4-4.5 million tons per month), the expert emphasizes.
The main exporter of gasoline and diesel fuel to Russia will remain BelarusAccording to Sergey Frolov, Managing Partner of NEFT Research, Russia is currently receiving its main batches of petroleum products from Belarus. Reuters reported an increase in shipments from the republic by rail to 665,000 tons of gasoline and 418,000 tons of diesel from January to July. Furthermore, Russia has reportedly received several maritime shipments of fuel from India and Morocco. Thus, the total volumes over the seven months comprise less than a quarter of monthly gasoline and diesel consumption in Russia. This level of imports does not impact the wholesale gasoline price but may reflect on the retail price at independent petrol stations (not owned by major oil companies) that are forced to purchase imported volumes due to the unavailability of free batches in the domestic market. Given that the price of Belarusian fuel is significantly higher than Russian exchange indicators, private networks must sell gasoline at much higher prices to compensate for costs, compared to major oil companies' petrol stations.
Meanwhile, it seems that Belarus will remain our primary supplier. As noted by Sergey Tereshkin, CEO of Open Oil Market, establishing maritime imports of petroleum products requires infrastructure that saves time and costs. Therefore, with Belarus able to produce over 3 million tons and export about 2 million tons of gasoline by rail annually, it will continue to be the primary source of fuel imports for the time being.
Furthermore, the expert believes that retail prices will largely depend on the stability of Russian oil refineries' operations and the dynamics of unscheduled repairs.
Regarding the reduction of environmental standards, Tereshkin believes that the transition to producing Euro-2 fuel depends on the situation at specific refineries, particularly the operability of the units involved in producing high-octane fuel with low sulfur and aromatic compound content. This pertains to catalytic cracking units that break down vacuum gas oil into light gasoline and diesel components; hydrocracking units that cleanse oil fractions from sulfur compounds and nitrogen using hydrogen on catalysts; as well as isomerization units that increase the octane number of gasoline fractions without adding harmful substances. The availability of production capacities will play a decisive role.
According to Frolov, large oil companies' refining facilities are expected to continue producing Euro-5 and higher petroleum products. Smaller refineries will produce Euro-4, 3, and 2 class fuels, which were previously unable to access the domestic market due to a low depth of processing (as per technical regulations). Currently, the primary volumes of fuels with reduced environmental standards will be supplied to sectors that utilize equipment with low quality requirements, such as agriculture. It is unlikely that low-grade petroleum products will play a significant role in the Russian market. In any case, petrol stations must disclose information about the parameters of the fuel being sold, the expert points out.
Source: RG.RU
