Rosneft head Igor Sechin proposed to Vladimir Putin measures to stabilize the Russian fuel market “in the context of an unprecedented amount of damage” to Russian refineries, Kommersant wrote.
Sechin sent a similar letter to the President of the Russian Federation at the end of May. In his speech, Sechin mentions that exchange sales standards are now in effect for producers of Euro-5 gasoline and diesel fuel (15% and 16%, respectively). It is proposed to suspend this rule until the refinery’s capacity is fully restored and the following measures are taken:
- Obliging producers of Euro-3 fuel – “with temporarily permitted reduced quality characteristics” – to sell the entire volume of their products on the exchange.
- Providing priority access to the exchange to end-buyers of gasoline and diesel fuel, rather than to “income-maximising” sellers.
- Obligating all oil companies to supply at least 30% of the raw materials produced for manufacturing within the country.
- Changing the procedures for calculating exchange sales of vertically integrated oil companies – taking into account the needs of their own gas station networks, as well as supplies under government orders and life support institutions.
According to Kommersant, Putin saw Sechin’s appeal and instructed Deputy Prime Minister Alexander Novak to “look into the matter and report on it.”
The publication’s industry sources particularly highlighted among Sechin’s proposals the point regarding priority access to fuel for end customers. In their view, it is a “logical initiative,” but difficulties may arise in its implementation.
In particular, Kommersant’s interlocutors noted that many independent gas station chains that buy fuel on the exchange do so through dealers rather than directly. In such a case, it is not clear how to determine the ultimate buyer position.
The Ukrainian army regularly attacks Russian oil industry facilities. Due to drone attacks, Reuters reported at the end of May, almost all major oil refineries in central Russia were forced to suspend or reduce production. Dozens of Russian regions have imposed restrictions on the sale of gasoline and diesel fuel.
Against the backdrop of fuel shortages, the government allowed some refineries to produce gasoline and diesel fuel on the domestic market with deviations from the Euro-5 standard with regard to sulfur content and other indicators. This Euro-3 fuel is intended exclusively for the domestic market.
In the second half of May, it was reported that independent gas stations, which account for about 40% of fuel sales in Russia, were unable to replenish fuel stocks on the exchange. Representatives of these gas station networks said that vertically integrated companies (including, in particular, Rosneft) have almost stopped selling petroleum products on the stock exchange, and send them to their own gas stations.