Russia bans petrol exports amid shortages

28th April 2011, Comments 0 comments

Russia decided on Thursday to halt premium petrol exports and switch the flow to the home market to fight shortages and a price rise that is coinciding with growing voter discontent.

The sudden announcement from the world's biggest oil producer came after Prime Minister Vladimir Putin ordered his government to tackle an issue that has been gaining increasing attention ahead of upcoming parliamentary polls.

Government official said the ban would apply for the month of May alone and only cover high octane petrol (gasoline) sold at the highest prices.

But Putin also ordered an immediate boost in export duties and a cut in local excise taxes aimed at keeping most future petrol sales of all types within Russia.

"Prepare proposal and drafts that will raise export tariffs on oil products starting in May," news agencies quoted Putin as telling his ministers.

The flurry of decisions came after two dozen Russian regions reported shortages that were causing prices at the pump to jump by as much as 30 percent since the weekend.

Russia officially exported three million tonnes of petrol last year but energy companies are reporting higher foreign deliveries in the first quarter because of surging global energy prices.

Deputy Energy Ministry Sergei Kudryashov said companies had already matched last year's export total by the end of March.

The surge in exports came after Putin accused oil firms of using the North Africa and Middle East crises to "crudely exact maximum gains" and ordered an immediate freeze in local gasoline prices.

The move received broad play on state controlled television and seemed to paint Putin as a defender of citizens' interests against the greed and excesses of oil executives.

But analysts said that Putin's February showdown with the oil tycoons could have directly contributed to the Russian companies' decision to seek foreign markets and abandon local consumers.

"Putin ordered (oil companies) to control wholesale and retail prices and they complied," the Vedomosti business daily remarked.

"But world oil prices continued to grow and the companies quietly stepped up their exports, leaving only enough for the domestic market to keep their own (gas station) chains going," Vedomosti observed.

The steady rise in consumer prices -- particularly those on food -- has been reflected in polls showing the ruling party entering December's parliamentary elections with the lowest approval rating in its history.

Officials were quick on Thursday to suggest that any further increases would be both minimal and easily resolved.

The head of Russia's biggest private oil producer Lukoil said future rises should not exceed seven percent while the deputy energy minister called the shortage only structural in nature.

He noted that most regions receive their supplies from Rosneft and Gazpromneft -- the oil wing of Russia's natural gas monopoly -- and that the two government-controlled companies were now more than willing to help.

We "will jointly set up a schedule for May deliveries" with the state-held firms, Kudryashov said.

His ministry also introduced a long-discussed proposal to force all Russian companies to sell at least 15 percent of their gasoline on the local market at market prices.

Almost all energy sales within Russia are currently conducted according to fixed prices negotiated by producers and their clients -- many of them either state corporations or regional administrations.


© 2011 AFP

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