Russia bans gasoline exports amid shortages

28th April 2011, Comments 0 comments

Russia decided on Thursday to halt gasoline exports and switch the flow to the home market to fight shortages and a price rise that is coinciding with rising 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 elections.

Deputy Energy Ministry Sergei Kudryashov's comments suggested the ban would only apply for the month of May and then be followed by higher gasoline (petrol) export duties aimed at keeping most future sales within Russia.

"Today we agreed that companies will provide all their volumes for the domestic market," Kudryashov told state television. "There will be no exports."

"I believe that for May, we should cover demand by limiting exports," he added in separate comments carried by Russian news agencies.

A spokesman for the country's biggest oil producer Rosneft later confirmed that the decision only applied to the upcoming month.

"The halt is only on high octane gasoline, which is in deficit in Russia," the unnamed spokesman told Dow Jones Newswires.

The unexpected decision 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 gasoline last year but energy companies are reporting higher foreign deliveries in the first quarter because of surging global energy prices.

The Russian domestic market remains tightly regulated and local price increases have already resulted in probes and fines against some of the country's largest producers.

Kudryashov said the government would prefer not to meddle in the domestic market directly and instead gradually raise export duties aimed at encouraging Russian producers to sell at home.

"We rule out the introduction of state regulation," the deputy energy minister said. "There are other levers."

Putin this year accused oil firms of using the North Africa and Middle East crises to "crudely exact maximum gains" and received assurances that special gasoline discount rates would be introduced across the country shortly.

But analysts said the move may have been partially behind the Russian companies' decision to seek foreign market 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 gasoline supplies from Rosneft and Gazpromneft -- the oil wing 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.

© 2011 AFP

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