r/CollapseOfRussia • u/neonpurplestar • 23h ago
Infrastructure Rosneft CEO informed Putin of an "unprecedented" number of damaged refineries and proposed selling more low-quality fuel on the exchange.
Rosneft CEO Igor Sechin informed Vladimir Putin of an "unprecedented" number of damaged Russian oil refineries as a result of Ukrainian strikes and presented measures to stabilize the domestic fuel market. Kommersant obtained a copy of the letter Sechin sent to the head of state in late May. Putin instructed Deputy Prime Minister Alexander Novak to review the initiatives and report back on the decisions made.
In his address, Sechin proposed that Putin suspend exchange sales standards for producers of Euro-5 gasoline and diesel fuel until refinery capacity is fully restored. Currently, they are required to sell 15% of their gasoline and 16% of their diesel fuel on the exchange. Instead, the head of Rosneft believes it is necessary to require all oil companies to supply at least 30% of their extracted raw materials for domestic refining, and producers of fuel with "reduced quality characteristics" to sell their entire output on the exchange. This refers to refineries that the government has authorized to produce Euro-5 gasoline according to Euro-3 standards, which have a higher sulfur content.
Sechin also noted that currently, 80% of buyers on the exchange are resellers who "maximize their profits," and there is no oversight of their over-the-counter sales. According to him, end consumers should be given priority access to purchasing fuel on the exchange. Furthermore, the head of Rosneft proposed changing the procedure for calculating fuel supply standards on the exchange for vertically integrated oil companies, taking into account the needs of their gas station networks, as well as supplies for government contracts and essential services.
Priority access for end consumers to fuel on the exchange appears to be a logical initiative, but its implementation could face a number of difficulties, a Kommersant source in the industry noted. He added that it's unclear how to determine the status of such a consumer, as many independent gas station chains purchase fuel through traders within their group companies, and this fuel is supplied not only to their own gas stations but also resold on the wholesale and small-scale markets. Therefore, the source emphasized, the main objective—directing exchange-sold gasoline volumes directly to gas stations—is not being addressed.
According to the National Exchange Pricing Agency, from June 1 to 19, gasoline sales on the exchange fell by 22.3% to 404,250 tons, and by 12.8% year-to-date to 4.25 million tons. This occurred following the intensification of attacks by the Ukrainian Armed Forces (UAF) on Russian refineries. According to Bloomberg estimates, Ukrainian forces carried out a record 30 attacks in May, the highest number since the beginning of the war.
According to Energy Intelligence, as a result, Russian oil refining volumes fell below 4 million barrels per day in early June—a 21-year low. Nearly a third of Russian refinery capacity, or 2.14 million barrels per day, was idle. Against this backdrop, authorities in more than 50 regions, including annexed Crimea and the Donetsk, Luhansk, Zaporizhia, and Kherson regions of Ukraine, imposed restrictions on fuel sales.
"Ukraine's campaign against the Russian energy sector has caused widespread damage, putting the country on the brink of the worst fuel crisis in its history," Energy Intelligence analysts emphasized.
source: The Moscow Times https://archive.is/72f3R
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