It is specifically noted that the oil for processing is provided to foreign refineries under tolling agreements, that is, for the production of a final product—fuel with specified characteristics.
This measure aims to prevent even the slightest hint of fuel shortages in our market. The focus is primarily on gasoline, as the production capacity in our country only exceeds the consumption volumes by 10-15%. This year, due to the halting of our NRPs for unscheduled repairs because of UAV strikes, the risk of gasoline shortages has emerged in various regions of Russia. This was the primary reason for the increase in its quotations on the exchange and prices at gas stations.
Certainly, one could simply import fuel— for example, from China or Belarus, but in this case, its price would be significantly higher than domestic prices. Mechanisms aimed at reducing prices for domestic consumers are in place in our market. 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 Russian fuel.
As noted in an interview with "RG" by Yuri Stankevich, Deputy Chairman of the State Duma Committee on Energy, this decision is a forced one but justified under current conditions. In any case, import should be viewed as a temporary phenomenon. The established capacities of Russian oil refining significantly exceed both gasoline and diesel demands. The goal is not only to restore production levels but also to increase them. For gasoline, the medium-term target is to raise production by at least 10% compared to 2024 levels. The own capacities of Russian oil refining significantly exceed the internal demand, both for gasoline and diesel.
A similar opinion was expressed by Sergey Frolov, managing partner at NEFT Research, who believes that under current conditions (attacks on Russian energy facilities), this measure appears justified and can serve to cover local shortages.
A reasonable question arises: where can the supplies come from? According to Stankevich, the primary source will be Belarusian refineries.
Belarus has two refineries—Mozyr and Novopolotsk ("Naftan")—which have historically been geared towards external markets, as clarified by Sergey Tereshkin, CEO of the OPEN OIL MARKET petroleum marketplace. According to the latest available data from Belstat, in 2020, gasoline production in Belarus amounted to 3.2 million tons, of which 1.3 million tons went to the domestic market and 1.8 million tons were exported (the remaining volumes likely constituted storage stocks, according to Belstat). The expert emphasizes that even with a complete reorientation to the Russian market, Belarusian refineries would only be able to cover less than 10% of Russia’s gasoline needs (annual gasoline demand in Russia stands at 38-40 million tons).
Moreover, there is also a logistics issue. The region in Russia most challenged by fuel supply is the Far East, but deliveries from Belarusian refineries there would be "golden." Furthermore, gasoline and diesel fuel (DT) are already more expensive in the Far East than in other regions of the country.
Therefore, Frolov suggests that the main candidate for supplies could be China, where, due to the slowing pace of economic growth, petroleum refining capacities are underutilized. Thus, from a logistics perspective, China appears to be one of the most appealing options.
However, as Stankevich reported, options for imports from Asian countries have been discussed and continue to be, although they seem unlikely since potential participants in such deals are either forced to purchase oil and fuel abroad themselves or fear falling under US sanctions due to their trade relationships with Russia.
As noted by Dmitry Gusev, Deputy Chairman of the Supervisory Board of the "Reliable Partner" association and member of the expert council of the "Gas Station of Russia" competition, in theory, imports from Chinese or Indian refineries could be envisaged. However, such supplies are unlikely to be logistically advantageous. Refineries are typically built either close to the sales market or near oil extraction points.
Nevertheless, if we are speaking solely about a temporary measure, it will help weather the “hard times” of peak demand—specifically spring's end, summer, and early fall for gasoline. From Tereshkin's perspective, the impact of this measure will be limited. To mitigate the risks of shortages, it is essential to increase the production of petroleum products in Russia.
The need for additional oil refining capacities within Russia is emphasized by Gusev, who also notes that while the implemented scheme is "working," it leads to losses in budget funds.
Finally, it's worth mentioning that importing fuel under such conditions could create an unfavorable precedent for us. Russian companies have always found it beneficial to export crude oil. And now, especially since oil refineries are in a zone of potential risk, importing ready-made fuel from other countries could become a "relaxing factor" for our companies, leading to further increases in crude oil exports rather than developing domestic refining capacities.
However, Frolov believes that strategically, the measures taken should not impact Russian oil refining significantly. The government always has the option to cancel the reverse excise tax decision.
Source: RG.RU
