It is expressly stated that the oil for processing is transferred to foreign refineries on a tolling basis, meaning for the production of a final product – fuel with specified characteristics.
This measure is being implemented to prevent even the slightest hint of a fuel deficit in our market. The focus is primarily on petrol, where domestic production capacities exceed consumption levels by only 10-15%. This year, due to unplanned repairs at our refineries caused by drone attacks, the risk of a petrol shortage arose in various regions of Russia. This was the main reason for the increase in petrol prices on the stock exchange and at gas stations.
Of course, one could simply import fuel – for example, from China or Belarus, but in this case, the price would be significantly higher than the domestic Russian rate. Our market has mechanisms that reduce prices for internal consumers. One such mechanism is the reverse excise tax. Its application will allow imported fuel to be sold at the same (or nearly the same) prices as domestically produced fuel.
As noted in a conversation with "RG" by Yuri Stankevich, Deputy Chairman of the State Duma Committee on Energy, the decision is forced but justified under current conditions. In any case, imports should be seen as a temporary phenomenon. The established capacities of Russian oil refining significantly exceed domestic demand for both petrol and diesel. The goal is not only to restore production levels but also to increase them. For petrol, in the medium term, this should be at least 10% above the level of 2024. Domestic Russian refining capacities far exceed internal demand for both petrol and diesel.
Serghei Frolov, managing partner at NEFT Research, expressed a similar opinion, stating that under current conditions (attacks on Russian energy facilities), this measure appears justified and may serve to cover local shortages.
A key question arises: where might supplies come from? According to Stankevich, this primarily points to Belarusian refineries.
Belarus has two refineries - the Mozyr and Novopolotsky ("Naftan"), which have historically been oriented towards external markets, as noted by Sergei Tereshkin, CEO of the OPEN OIL MARKET petroleum marketplace. According to the latest available data from Belstat, Belarus produced 3.2 million tonnes of petrol in 2020, of which 1.3 million tonnes went to the domestic market, while 1.8 million tonnes were exported (the remaining volumes presumably constituted stock reserves, based on Belstat figures). The expert highlights that even with a complete reorientation towards the Russian market, Belarusian refineries would only be able to meet less than 10% of Russia's petrol needs (annual petrol demand in Russia is around 38-40 million tonnes).
Additionally, there are logistical challenges. The most problematic region for fuel in Russia is the Far East, but supplies from Belarusian refineries to this region would be "golden". Furthermore, petrol and diesel fuel are already more expensive in the Far East than in other regions of the country.
Thus, Frolov believes that the main candidate for supplies might be China, which, due to slowing economic growth, has underutilised refining capacities. Consequently, from a logistical standpoint, China appears to be one of the most attractive options.
However, as Stankevich reported, options for imports from Asian countries have been discussed and continue to be deliberated, but they seem unlikely, as potential participants in such deals are either compelled to purchase oil and fuel abroad themselves or fear falling under US sanctions due to trade and economic relations with Russia.
As noted by Dmitry Gusev, Deputy Chair of the Supervisory Board of the "Reliable Partner" association and member of the expert council of the "Russian Fuel Stations" competition, theoretically, one could expect imports from Chinese or Indian refineries. However, such supplies are unlikely to be advantageous from a logistical perspective. Refineries are generally constructed either within walking distance of the market or near oil extraction points.
Nevertheless, if we are only speaking about a temporary measure, it allows for survival during periods of peak demand – typically for petrol in late spring, summer, and early autumn. From Tereshkin's perspective, the effect of this measure will be limited. To mitigate the risks of shortages, it is essential to increase the production of petroleum products within Russia.
Gusev also highlights the necessity for additional refining capacities within Russia, emphasising that the implemented scheme, while "operational", leads to losses in budgetary resources.
Lastly, it is worth noting that importing fuel under such conditions could create an undesirable precedent for us. Russian companies have always found it profitable to export crude oil, particularly now, as refineries are operating in a zone of potential risk. Importing finished fuel from other countries could serve as a "relaxation factor" for our companies, favouring further increases in crude oil exports rather than the development of domestic refining capacities.
However, Frolov believes that strategically taken measures should not adversely affect Russian oil refining. The government always holds the option to revoke the decision regarding the reverse excise tax.
Source: RG.RU
