MOSCOW - Russia's Energy Ministry, struggling to build up fuel stocks for the winter, said the government should restrict oil firms to exporting only 20 percent of their fuel oil, a ministry official said on Monday. "It is necessary to introduce obligations for fuel oil deliveries on the domestic market from the first (of September)," First Deputy Energy Minister Ivan Matlashov told a meeting of the ministry's officials.
"Oil companies must give 80 percent of fuel oil to the domestic market."
Russian oil firms try to pump as much oil and oil products to hard currency markets abroad, where prices are usually higher than in Russia. But the government has to provide the country with fuel for the winter.
The goverment decided to raise the fuel oil export tariff to 20 euros per tonne from 10 euros per tonne from mid-September, but Matlashov said the system would not restrain exports.
"The introduction of an export tariff of 20 euros does not produce any result," he said. "Even if we introduce prohibitive tariffs, hike them three times, it will not give any result."
Matlashov said Russia would produce 4.20 million tonnes of fuel oil in September, of which 2.52 million tonnes would be exported, while Russia's needs amounted to 3.70 million tonnes.
He also said the current domestic price for fuel oil of 2,850 roubles ($90.25) per tonne was three times higher than it should be because oil companies had been exporting too much.
LITTLE DAMAGE SEEN
Alfa-Bank energy analyst Konstantin Reznikov said the curb, if implemented, would not hurt oil companies in as much as their export losses could be compensated by higher domestic prices in the cold season.
Another way to compensate for the losses was to bypass the law by exporting fuel oil to the CIS, which the Russian government does not consider exports, and then re-export the volume to hard currency markets.
"This is not much trouble for oil companies," Reznikov said.
Energy Minister Igor Yusufov said the ministry might launch an "anti-monopoly" investigation into oil firms' activities.
"Then we shall be able to get a fair price for oil products on the domestic market," he said.
In previous years the government has limited fuel oil exports by establishing a maximum percentage of domestic refinery output which can be sent abroad. The range has usually been between 10 and 50 percent.
Matlashov said the Energy Ministry had already asked the government to introduce obligatory sales of fuel oil to the local market and the cabinet might consider it at its meeting on Tuesday.
Russia, the world's second largest oil exporter, ships up to three million barrels per day of crude to international markets and up to 70 million tonnes of refined products per year. ($ = 31.5803 roubles).
/Reuters/
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