Conference: Russia’s Oil Products Market: Basic Development Vectors

Date: October 14, 2016

Trends of the global market of crude and petroleum products, Russia’s role in hydrocarbon supply to the European and Asian markets, price projections for 2017 by the leading Russian oil companies, trading performance evaluation and anti-trust regulation, fiscal policy, and creation of an aircraft filling station chain.

The 7th international conference Russia’s Oil Products Market: Basic Development Vectors has been concluded in Moscow.

Among the participants of the forum there were representatives of the leading Russian oil companies (Rosneft, Lukoil, Gazprom neft), refineries and mini-refineries, Federal Antimonopoly Service, Federal Tax Service, traders, logistics specialists, and leading overseas experts. Participants represented a wide number of regions, from the United Kingdom to Japan.

The keynote speech was delivered by a leading expert in petroleum products, Mike Davis, Director of Market Development at ICE (Intercontinental Exchange), the largest trading holding in the world. The expert focused his attention on the battle over the margins: he explained why the US are losing their ground, how the EU is gaining its influence back, and how Russia and China are improving their positions. He also analyzed production growth and the development of diesel market in Russia, China and the Middle East.

The audience was particularly eager to hear out the representatives of NIOC, the National Iranian Oil Company. Masoud Moradi Azad, Deputy Director for Products Marketing and Operations, assessed the markets of fuels and lubes in the Middle East. Saeid Khoshrou, Deputy General Manager for Product Marketing, shared the plans of NIOC regarding diesel and gas oil. There were lots of questions to the Iranian specialists; delegates asked them about the plans of Iran to grow its crude and petroleum product yields, about refinery upgrades, the quality of Iranian gasoline, among many other subjects. The Iranian petroleum experts confirmed that their country is very serious about cross-frontier operations, both with Russia and other neighbor states. In his interview to MAXConference on the sidelines of the meeting, Mr Moradi said: «After post-sanction period we could be able to do more in the Caspian Sea area because as you know we still are importing some gasoline from it and we might be able to cooperate with some Russian companies to import more gasoline from the Caspian Sea».

Crude exchange trading became quite a special discussion topic. According to SPIMEX representatives, the Urals futures trading is to start in the late November. In their turn, FAS representatives said that, within their organization, under the Exchange Committee, there was created a special-purpose subcommittee tasked with tracking crude exchange trading processes. Similar subcommittees will be formed for the regulation of trading of other products that are planned to be sold via the exchange, like jet fuel.

Another discussion was dedicated to pricing trends in the Russian petroleum product market. Among the participants there were representatives of Gazprom neft, LUKOIL, SPIMEX, Belarusian Oil Trade House, Uralsib bank, Federal Antimonopoly Service and Federal Tax Service.

Yakov Ruderman, Director General of Petromarket Research Group, acknowledged the current trend towards the reduction of refining volumes. The deficit of high-quality gasoline in the domestic market is offset by fuel surrogates. The stats of the Federal Agency on Technical Regulating and metrology show a 20% share of counterfeit gasoline sales in the region. In his turn, Sergey Kolyada, Senior Manager of LUKOIL noted that in the near future the company will be able to meet the domestic demand for gasoline. At the moment LUKOIL is looking into the construction of a product pipeline from the Kstovo refinery to the Moscow region, the latter being the most capacious fuel market. However, according to experts, companies are more interested in refining the feedstock into petrochemical products.

Several presentations centered around the development of the jet fuel market. The most passionate and powerful speech was the one delivered by Ilia Borisov, Head of the Commercial Division of Tupolev Service. He came up with an innovative idea of creating an extensive network of aircraft filling stations, similar to the ones used for automobiles. According to him, small aircraft and regional airlines in remote regions of Russia are the ones who have a particular need for such filling station chains

We would like to thank our speakers, partners, and other conference participants from NIOC (National Iranian Oil Company), LUKOIL, Bashneft, Rosneft, Gazprim neft, Surgutneftegaz, Gazprom gazenergoset, Omnitrade, SOCAR, Rosneft Overseas SA, Tupolev Service, Onis Petroleum, GIFA, Petromarket Research Group, Concept Oil, Moboil, Mosneftetrans, VPK Oil, Novorossiysk Commercial Sea Port, Novorossiysk Fuel Oil Terminal, Antipinsk Refinery, TRASSA GROUP, Neftek Operating, Petroleum Trading, LUKOIL AERO, GAZPROMNEFT-AERO, Star Nafta, Belarusian Oil Trade House, Ludan Engineering Rus LLC, Thomson Reuters, BFA bank, URALSIB bank, SPIMEX, Algoritm Toplivny Integrator (‘Algorithm Fuel Integrator’), All-Russian Research institute for Oil Refining, and others.