Rosneft, stabilization of Russia’s petroleum products market

Russia’s top oil producer Rosneft supports the actions of the government on stabilization of the situation on the fuel market and has submitted a number of its own proposals, including those on mitigating the risk of oil and petroleum products deficit, the company said in a statement on Wednesday.

Particularly, Rosneft supports the government’s initiative on introducing obligations on supplies of 17.5% of oil and gas condensate produced in the country, for local refining and selling motor fuels on the domestic market. The company considers it necessary to include those obligations into extraction licenses.

According to the statement, Rosneft projects a 1.5-fold rise in its tax payments to the budgets of all levels in 2018 to 3.8 trillion rubles ($57.8 bln). "Rosneft fully meets its obligations on budget revenues formation and leads the pack in terms of total contributions to budgets of all levels: in 2017, the company’s total tax payments amounted to 2.575 trillion rubles ($39.2 bln), while the projected level of 2018 payments is 3.8 trillion rubles ($57.8 bln)," the statement said.

Russian Deputy Prime Minister Dmitry Kozak instructed the Energy Ministry and the Federal Antimonopoly Service (FAS) to prepare proposals on new stimulus moves for oil producers to ensure saturation of the petroleum products market following the meeting on the market situation on October 24. The Energy Ministry and the Federal Antimonopoly Service together with the Finance Ministry and the Ministry of Economic Development are to submit proposals on mechanisms to ensure saturation of the domestic market of petroleum products that are alternatives to protective duties to the government until Wednesday, October 31. They should envision linking exports of crude and petroleum products to obligations of oil producers on ensuring required domestic supplies.

TASS sources in the government said earlier that the authorities are developing a mechanism of licensing exports of petroleum products as a possible measure to stabilize the domestic fuel market.

Since May, the government has been taking measures to curb domestic prices for gasoline, which had risen amid growing oil prices and a weaker ruble. As a result, refiners had a negative margin when selling fuel on the domestic market and had to compensate it by increasing retail prices. In order to stop their growth, the government canceled a planned increase in excise taxes on gasoline and diesel fuel, and also demanded that the oil producers should fix their prices. Then, as a stimulating measure, the authorities promised the companies to increase export duties on oil and petroleum products if insufficient volume of fuel is supplied to the domestic market and prices start to rise again.