According to the latest data from Rosstat, average gasoline prices have decreased in most regions of the country (47 out of 89). However, this has not yet occurred everywhere, with gasoline continuing to rise in price in 27 subjects of the Russian Federation. Additionally, the high base effect has influenced the statistics - prices have significantly decreased in areas where fuel was very expensive, thereby affecting the final result.
During the week from July 28 to August 3, the average cost of gasoline at Russian filling stations dropped by 1.1% (more than one ruble). In Crimea, prices fell by almost 15% (by 32.8 rubles), and in the Vologda region, they decreased by 12.2% (by 11.11 rubles). In contrast, prices in Moscow and St. Petersburg slightly increased by 0.2% (by 12 kopecks), while in the Tomsk region, gasoline became 5.2% more expensive (by 3.5 rubles).The peak demand for gasoline due to the holiday season occurs in July-August. Typically, these two months see the most significant price increases for the year at filling stations. This year, due to unscheduled repairs at oil refineries (ORFs) following drone attacks, the summer price hike for gasoline has become record-high, accompanied by localized supply disruptions and queues at filling stations. Therefore, the fact that fuel prices are currently decreasing indicates that the situation may have stabilized. However, retail gasoline prices will continue to depend on the stability of domestic refineries. If production within the country can be increased, prices may continue to drop. Additionally, the import of fuel from other countries and the reduction of environmental requirements for the produced fuel positively impact domestic market saturation, allowing for increased production volumes. However, there are nuances to consider. Imported gasoline is more expensive than Russian fuel. To mitigate this price difference, a damping mechanism has now been applied to its suppliers in Russia. Importers have the right to receive a portion of the difference between the price of gasoline in the external market and its indicative price in Russia (set by the government), which helps curb wholesale price increases. However, this represents an additional burden on the country’s budget, which is already expected to be deficit. Furthermore, for the Russian treasury, expensive oil has always been advantageous, but with fuel imports, the high cost of imported petroleum products becomes a disadvantage. The funds do not come from thin air, and to pay these importers, it will be necessary to cut back on other expenses. It is currently impossible to determine how much payments under the damping mechanism have increased since 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 an interview with "RG" by Dmitry Gusev, Deputy Chair of the Supervisory Board of the Association "Reliable Partner" and member of the Expert Council of the "Gas Stations of Russia" competition, the main task now is to ensure fuel availability. Oil companies are doing everything possible to supply the market. However, assessing the volume of fuel imports into Russia is complicated, 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 Belarus.According to Sergey Frolov, managing partner of NEFT Research, Russia currently receives the bulk of its petroleum products from Belarus. Reuters reported an increase in supplies from the republic by railway (rail) from January to July to 665,000 tons of gasoline and 418,000 tons of diesel fuel. Additionally, unofficial reports indicate that Russia has received several sea shipments of fuel from India and Morocco. Therefore, the total imports over seven months account for less than a quarter of the monthly consumption of gasoline and diesel fuel in Russia. This level of imports does not affect wholesale gasoline prices but may impact retail prices at independent filling stations (not owned by large oil companies) that are forced to purchase imported volumes due to the unavailability of free stocks in the domestic market. Since the price of Belarusian fuel is significantly higher than Russian exchange indicators, private networks have to sell gasoline at much higher prices to cover expenses than what is charged at filling stations of major oil companies.
Meanwhile, it seems that Belarus will continue to be our main supplier. As noted by Sergey Tereshkin, CEO of Open Oil Market, establishing marine imports of petroleum products requires infrastructure that can save time and costs. Thus, Belarus, which is capable of producing over 3 million tons and exporting about 2 million tons of gasoline by rail annually, will still be the primary source of fuel imports for the time being.
The expert believes that retail prices will be significantly influenced by the stability of Russian oil refineries and the dynamics of unplanned repairs at these facilities.
Regarding the reduction of environmental standards, Tereshkin believes that the transition to Euro-2 fuel production depends on the circumstances of specific oil refineries, more specifically on the operational status of equipment involved in producing high-octane fuel with low sulfur content and aromatic compounds. This includes catalytic cracking installations that break down vacuum gas oil into light gasoline and diesel components; hydrocracking installations that remove sulfur compounds and nitrogen from oil fractions using hydrogen on catalysts; and isomerization installations that increase the octane number of gasoline fractions without adding harmful substances. The availability of production capacities will be critical.
Frolov holds that major oil companies' large refineries will continue producing Euro-5 and higher petroleum products. Smaller refineries will manufacture Euro 4, 3, and 2 class fuels, which have previously been unable to enter the domestic market due to low processing depth (according to technical regulations). Currently, the majority of volumes with reduced environmental standards will be supplied to sectors where equipment has 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, filling stations must disclose information about the parameters of the fuel sold, the expert points out.
Source: RG.RU
