Independent traders are asked FAS to oblige the big oil company to increase sales of fuel oil on the exchange from 2 to 5% of production, which has declined sharply over the past three years. In 2016 the volume of sales almost doubled, to 7.1 billion rubles.
The shortage of fuel oil
Due to the fall in production and sales of fuel oil, the largest in Russia Saint-Petersburg international Mercantile exchange (SPIMEX) traders was not enough of this product. As a result, the price of oil, which in mid-January 2016, 3,8 thousand rbl. for 1 t, 26 Oct nearly tripled, to 11.18 million RUB per 1 ton.
In order to increase the sales volume of fuel oil at the exchange, CEO of the nonprofit partnership “Council of commodity markets” (SPTR, brings together 13 of the traders of oil products from Moscow, Omsk, Bashkortostan and other regions) Alexander Gudkov asked the Minister of energy Alexander Novak and the head of the Federal Antimonopoly service Igor Artemyev to require major oil companies to sell on the trading platform 2.5 times more fuel with 2% to 5% of its annual production. To do this, departments should make changes to their joint order, the letter said Gudkov, dated 21 October (RBC has a copy). The representative of the Ministry of energy confirmed the receipt of the letter and said that it would be considered.
According to the energy contained in a letter to Gudkov, the average oil production in Russia over the past three years has fallen by 30%, from 6.67 million in 2014 to 4.69 million tons in 2016. Still faster falling sales on the stock exchange: in 2015, it decreased by 28.8%, to 1.8 million tons, follows from the data exchange. And for the first ten months of 2016 — even by 21.7%, to 1,097 million tons, estimated by leading analyst of the company “Algorithm fuel integrator” Victor Kostyukov. The volume of sales in money terms fell even more — 42.3%, to 7.1 billion rubles, he says.
The demand for fuel oil in the domestic market has not changed, and the proposal was strongly reduced, particularly regarding the combustion of fuel oil necessary for the operation of boilers, Gudkov specifies.
Why do we need oil
Fuel oil is a byproduct of oil refining in the production of light oil. It is used as a marine fuel, raw materials for further production of other oil products and residual raw material for the boiler. According to the energy Ministry, in 2015 Russia produced 71.7 million tonnes of fuel oil, and in 2016 production will be reduced by approximately 22% to 56 million tonnes, According SPTR, more than 80% of Russian oil is exported and the rest goes to the domestic market.
In the letter Gudkov as one of the reasons for the reduction in sales of fuel oil at the exchange stated that some large companies such as LUKOIL and Independent oil and gas company, due to the reduction in production volumes of fuel oil ceased to be dominant, and now you don’t have to sell on the stock exchange and 2% fuel. This obligation remained only “Rosneft” and “Gazprom of oil” indicates the official FAS.
According to the data of the website SPIMEX OJSC, “Rosneft” plans in 2016 to reduce the sale of oil on the stock exchange by about 12%, with 533,3 thousand to 470,3 thousand tonnes But last year the company sold on this site just 2% of the produced fuel (26.6 million tons), and in 2016 — even more: in November it plans to sell on the stock exchange of 1.69 tons of oil, or 5% of production (more than 35 thousand t), follows from materials of the exchange. “Gazprom Neft” in 2016 will reduce the sale of oil on the stock exchange only 5%, and 128.2 thousand tons to the company’s Representative stresses that she sells on the stock exchange more than 2% of the produced fuel.
The reduced supply of fuel oil at the exchange will increase the amount of its realization by direct contracts, “exerting a negative impact on the state of competition and reducing the quality of stock market indices”, said Gudkov.
The FAS has instructed SPIMEX until Friday, October 28, to send data on the levels of sales of fuel oil in the years 2014-2016 by companies and indicate whether there were violations of the uniformity and regularity of its minimum sales volumes, reads the minutes of the meeting of the exchange Committee of the FAS of 19 October (RBC has a copy). The service representative confirmed to RBC that the exchange Committee plans to consider issues relating to sales of fuel oil. The initiative Gudkov, he refused to comment. “What is the economic rationale for this? Who prevents [independent companies] to buy [oil] out of the exchange? If there is an unreasonable refusal to sell directly, then give the order”, — told RBC official FAS.
However, buyers of oil do not consider direct contracts more convenient than buying a product on the exchange. The CEO of trader “ufaojjl” Rinat Fattakhov told RBC that in favor of an increase in sales of fuel oil on the exchange, because it’s easier to buy goods than by direct contracts with the oil companies: “the Price through direct contracts can be changed at the request of the seller, moreover, there is no guarantee that we will sell the desired volume of oil and put them in time”. And in exchange the price is fixed at the time of purchase, as the timing and place of delivery of goods, he added. With the purchase of fuel oil through direct contracts from oil, its price is fixed for the month ahead, and the exchange, it changes regularly, so there is a possibility to buy the desired amounts of cheaper, confirms the chief specialist of management of fuel of the Perm branch of “T plus” Dmitry Chesnokov.
“Despite the observed decline in production of oil, the domestic market is fully provided to them, and its surplus is exported. Sold at the exchange amount of fuel sufficient for the determination of objective indicators of price,” said RBC representative of “Gazprom oil”. Plants of LUKOIL may provide fuel oil for the whole of Russia, but due to the lack of sufficient domestic demand, the fuel mainly is exported, goes to the source in LUKOIL. According to him, in the domestic market, the company sells about 5% of the produced fuel (not only through the stock exchange), but it is more profitable to do without intermediaries — direct contracts. Kirishsky NPZ “Surgutneftegaz” also greatly reduced the production of fuel oil due to lack of demand from customers — regional boiler rooms, adds the Manager, “Surgut”: they are mainly transferred to the gas.
The Governor of the Murmansk region Marina Kovtun in April 2014 proposed to increase the share of sales of fuel oil on the exchange from 2 to 5% of production, experts remind Thomson Reuters Kortes. In mid-2014, this initiative was discussed by the energy Ministry with the oil companies on behalf of Vladimir Putin, but then it was not supported, they indicate. “We should not expect that this time the FAS will approve the request SPTR,” say the experts. In the case of the adoption of this proposal possible negative consequences for the entire supply chain of companies, including obligations to export oil and supply through direct contracts, they warn. Representatives of “Rosneft”, “Surgutneftegaz” and LUKOIL declined to comment, the NOC could not be reached.