Igor Artemiev, the Head of the Federal Anti-Monopoly Service (FAS), has said that the retail price of gasoline should not exceed RUB 30/litre in the Moscow region, Interfax reports. Earlier today Prime Minister Dmitry Medvedev commented that the retail prices of motor fuels were rising too fast in some regions.
Gasoline wholesale and retail prices have been frozen at the level of 1 January 2012 and, as a result, at the end of the first quarter there was a negative internal market premium in the amount of USD 25/tonne. However, we expected oil product prices to catch up on the lost dynamics in the second half of the year, and even saw the first signs of an increase in 2Q12, with gasoline retail prices increasing consistently since 3 April. Now, though, we see a downside risk to our gasoline forecasts. The latest statement from FAS contradicts the government’s stated intention to compensate oil companies for lost profits during the first half of the year. Moreover, such administrative pressure would result in gasoline deficiency on the domestic market, and we see this as a near term risk. So the news is negative for Russian oil companies, however it does not undermine our general positive view on the downstream sector of Russian oils.