Gasoline in Russia will go directly to the gas station: will it help?

Experts continue to comment on the proposal of the head of Rosneft, Igor Sechin, to reform the fuel sector. The main blow is aimed at reseller intermediaries, who accumulate up to 80% of exchange volumes of fuel.

The initiative implies the temporary abolition of mandatory sales standards on the stock exchange before the restoration of refinery capacity and the introduction of a strict obligation for oil workers to process at least 30% of the produced raw materials domestically. Russian President Vladimir Putin has already instructed the relevant Deputy Prime Minister Alexander Novak to work out these proposals that can completely reshape the supply chains of gasoline and diesel to customers and gas stations.

The key complaint of Rosneft to the current market model is the lack of control over resellers. According to the company, the lion's share of fuel on the stock exchange goes not to end users, but to intermediaries who maximize profits against the background of volatility. To remedy the situation, it is proposed to introduce a system of priority access to bidding for real buyers and create a mechanism to ensure break-even import supplies.

"The proposal to oblige companies to send 30% of production to domestic processing is an attempt to guarantee the resource base within the country, bypassing export temptations," says macroeconomist Artem Loginov.

Particular attention is paid to the quality of fuel. After the government allowed the production of Euro-3 fuel to saturate the market, there was a risk of uncontrolled distribution of such a resource. Igor Sechin insists on the sale of the entire volume of simplified gasoline and diesel exclusively through the stock exchange. At the same time, regulators are already discussing lowering gasoline sales standards to 10% for the summer holidays, which should reduce price pressure and deprive intermediaries of the opportunity to cash in on the deficit.

The implementation of the idea of "priority for the end user" faces bureaucratic difficulties. Industry experts point out that today only 5-7% of products are purchased directly. The main volumes are taken by traders, and often they are part of the structure of the same independent gas station networks. It is extremely difficult to divide whether gasoline goes to a specific column or goes to a small wholesale store.

"Current statistics show a decline in gasoline sales by more than 22% in June. Without clear criteria of who is the final consumer, any segregation of buyers on the stock exchange can lead to distortions in the supply of independent gas stations," says financial analyst Nikita Volkov.

The statistics of the National Exchange Pricing Agency confirms alarming trends: since the beginning of the year, sales have fallen by 12.8%. In such a situation, each liter triggers a chain reaction of price changes, which forces operators to cancel discounts for corporate customers and introduce surcharges in local networks.

By the end of June, the situation had escalated to the limit. In a number of regions, including Omsk, Tyumen and Irkutsk, the authorities have introduced limits on the sale of fuel. In Crimea, fuel has become available mainly to the special services. The government is responding to an artificial shortage in the regions by accelerating repairs at refineries and a possible complete ban on the export of diesel fuel, which is still allowed to producers.

"Market mechanisms are currently unable to cope with the hype, so the transition to administrative distribution of volumes through 'basic suppliers' in the regions looks forced, but a logical step," said Gennady Chernov, an analyst at the petroleum products market.