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Experts: Russian refineries can cope with the current conditions of the supply from Belorussia

April 12, 2017/ 08:06

Moscow. Relieving Belorussia from the counter-deliveries of petrol to Russia won’t influence the market. The Oil and Gas Information Agency’s experts believe that the abandonment of the compulsory counter-deliveries of petroleum products from Belorussian refineries won’t affect the prices and the supply of petrol.
It was announced on Friday that Belorussia doesn’t have to supply petrol from its refineries to Russia in return for the shipment of Russian oil. The parties reached this agreement while settling their mutual claims concerning the oil and gas industry.
“The absence of supply from Belorussia will hardly affect anything. First of all, they haven’t been supplying anything for a long time now. Secondly, after modernizing Russian refineries we have feasibly improved their capacity and oil refining ratio. So, with the general decline in the business activity, the petroleum market has become loose in a way. Besides, despite being released of the obligation, Belorussia can still supply oil to Russia. In any way, I am sure that Russian fuel producing facilities will cope with the current conditions caused by the two countries’ agreement”, Evgeny Arkusha, the head of Russian Fuel-producing Union, told the Oil and Gas Information Agency.        
However, according to Andrey Gordeev, the analyst for Vergen Oil Group consulting company, this piece of news is still negative for the Russian market:  
“The supply from the Belorussian producers was more of a psychological factor, which kept the prices from rising. Since Russian companies had long ago divided the market by regions, there wasn’t much competition between them. As soon as Belorussia came to the market with its supply, insignificant as it was, the prices went down at once. Now there won’t be this limitation, so the abandonment of the compulsory counter-deliveries is a disadvantage for the market”.
As far the shortage of petrol is concerned, which is the primary factor affecting the price fluctuations, it is unlikely to happen. There are two reasons for this. The first one is the increase of petrol production caused by the modernization of the refineries. The second is a certain economic decline, which does not let the demand grow, but, on the contrary, causes its decrease. “Due to the increased petrol production we can compensate for any additional demand, should it ever appear”, explained the analyst.      
Mr. Gordeev doesn’t also expect abrupt changes in the price for petrol because of the proactive position of the Federal Anti-Monopoly Service in this respect: “A monopoly agent wouldn’t benefit from a sharp rise in prices, especially in the year preceding the elections”.
Note that the FAS representatives recommended oil companies to increase their supply of petrol brands to the market to restrain the producer prices, which affect the retail prices as well. “The producers took notice and the supply has grown. In general, relieving Belorussia from the counter-deliveries of petrol to Russia won’t really influence the petrol market. We have significant stocks of fuel, around 2 mln tons, which is more than in the previous years. The price increase rate will depend on the FAS”, concluded the expert.
Previously Belorussia had to supply 1 mln tons of petroleum products in return for importing oil from Russia. Now, as Alexander Novak, the energy minister, put it the relationships between the two countries “will be built under market conditions”.

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