Minister of Energy Alexander Novak has said that Russia might face gasoline shortages due to maintenance at several refineries coupled with increasing demand, RBC-Daily reports. The Ministry estimates the maximum deficit of 400kt of gasoline in October (15% of total consumption), including 69kt in the Moscow region. It recommends that oil companies reduce gasoline exports and use tolling schemes to increase domestic supply. There will be no shortage of diesel fuel, says the Ministry.
We are reiterating our view that, due to a lack of spare refining capacity and strong product demand, retail gasoline prices are currently entirely driven by the domestic demand-supply balance. We believe that a free pricing mechanism is the only way to manage domestic supplies effectively (rather than any restrictions on exports).
Most major oil companies have already notably reduced their exports, due to the internal market premium, and we do not see any significant room for improvement, while tolling schemes have become unprofitable under the current pricing environment.
Dmitry Loukashov, Alexander Kirevnin, Ekaterina Rodina, Elena Kopylova, Mikhail Zarkhi
VTB Capital analyst
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