According to Interfax, the Federal Antimonopoly Service (FAS) and the Ministry of Energy might consider delaying the deadlines for the ban of Euro-3 and Euro-4 gasoline and diesel fuel. Oil companies are not fully ready for the current deadlines due to delays in refinery upgrades. The FAS might also propose that oil companies use swap schemes when importing high-class gasoline. The Deputy Minister of Energy Pavel Fedorov said that the Ministry welcomes the suggestion of swap contracts, and that delaying the deadlines for low class fuel will be analysed further.
We believe that swap schemes cannot be profitable for Russian oil companies in the current pricing environment. If prices become more favourable, the scheme might be reasonable, but we do not expect this to happen in the short term. The potential delay in the deadlines for switching to higher class gasoline and diesel is expected, in our view, as oil companies are not ready for the switch under the current deadlines. We view the newsflow as neutral and do not expect any market reaction in Russian oils’ shares.
Dmitry Loukashov, Alexander Kirevnin, Ekaterina Rodina, Elena Kopylova, Mikhail Zarkhi
VTB Capital analyst
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