At their regular meeting, government officials, representatives of oil refineries and traders chose to ignore unresolved issues
The first meeting in four months of the sectorial group of experts and analysts on the operation of the oil and fuel market and the development of the oil refining industry took place at 30 Khreschatyk Street on November 15, 2011. The meeting fell below the radar of the Ukrainian mass media, and its agenda had only one issue — the current situation with prices on the country’s fuel market and the supply of resources. The participants in the meeting concluded that there are no threats to the current stability of the wholesale and retail segments. The available stocks of oil products (about 180,000 tonnes of petrol and 250,000 tonnes of diesel fuel) will be quite enough to meet current demand both in the short- and long-terms.
Although, according to calculations by the group’s secretariat, retail prices could be 10-20 kopecks per liter lower, Energy and Coal Minister Yuriy Boiko, who chaired the meeting, said that he did not insist on their reduction, but instead thanked market operators for «a well-balanced balanced pricing policy» during the fuel crisis that broke out in Russia and Belarus this summer.
Such a benevolent attitude from the man from the ministry was in sharp contrast with its demands in summer «to reduce the prices to recommended levels,» and with the threat of an «antidumping» investigation initiated by the ministry, which menaced the market with the prospect of the introduction of protectionist import duties.
However, while describing the situation by the middle of November, Ihor Kiriushin, the director of the department for oil, gas, peat, the oil refining industry and alternative fuels (Who thought up the name for that department?) at the same time reproved traders for sharply increasing the margin for A-80 and A-92 petrol (he said this compensated for the low profitability of the trade in diesel fuel). According to calculations by the group’s secretariat), it has already reached $305-310 per tonne, which is significantly higher than the «recommended» $180 per tonne.
However, the methodology used to calculate this «gross margin» is not clear enough. One can only guess the procedure for calculating the said market indicator, as the data for the calculation (in particular, the values of conditional constants) are kept strictly secret by the group’s secretariat. Not surprisingly that none of the operators could observe the group’s «recommendations» in full. Who then needs such an indicator?
The attention paid to low-octane petrol, the share of which in retail sales fell to 4.5% this autumn (according to the State Statistics Service), seems quite unnecessary. A-80 is not produced by most Ukrainian companies, not to mention European refineries. Therefore the formula for establishing the average margin of market operators being M = (MA-80 + MA-92 + MA-95 + MDF)/4, without taking into account the structure and amount of fuel sales, looks weird, to say the least. Especially if one takes into account that far-reaching conclusions are based on the figure obtained. For example, the results of the calculations show that Shell, WOG, OKKO and all Crimean chains were living on the fat of the land January through October by receiving a $200 per tonne margin, while TNK and Ukrneft were left languishing with measly $150 per tonne (not reaching even the «allowed» $180 per tonne). At the same time, the owners of a bit more than a dozen filling stations under such brands as Neftek in Dnipropetrovsk region, Dzherelo in Vinnitsa region and Vostochnye Resursy (East Resources) in Luhansk region earned more from one tonne of fuel than the owners of the KLO and Zolotoy Gepard (Golden Cheetah) chains. It’s interesting to know that the poorest was BRSM-Nafta, with a $117 per tonne margin. They are such altruists!
You can read full article at the journal «Terminal: Oil Review» №47(581) 21 Nov 2011
