As of July 1, Russia and other Customs Union member countries have a ban on car fuel below Euro 5 environmental standard being marketed as part of civil circulation. Could this new situation result in a fuel deficit, and could the transition to Euro-5 fuel change the dynamics of Russian petroleum exports? Victoria Gimadi, Head of the Department for Fuel and Energy Sector, talked to a Rossiyskaya Gazeta correspondent about these and other issues.
No Deficit of Euro 5 Fuel Is Expected in Russia
"No deficit of Euro 5 fuel is expected in Russia. The issue of potential deficit of Euro 5 diesel fuel in the domestic market was de facto resolved back in 2014," Victoria Gimadi claims. "The petrol situation was more complicated, so the transition deadline was moved from the beginning of 2016 to July 1. During this time, according to the Russian Ministry of Energy, there were 12 oil refinery units launched, which made it possible for the Euro 5 transition to happen on July 1. The transition was made easier by the fact that, at the end of the first six months in 2016, the demand for petrol was somewhat lower against the same period in 2015. Data from the Central Dispatching Department of the Fuel and Energy Complex is a good illustration of the situation, showing that there is no deficit. During July 2016, the domestic market had 3.1 million tonnes of Euro 5 petrol delivered, and part of the produced petrol of the same class (0.1 million tonnes) was exported."
Perhaps, it was worth delaying the transition in small towns and low population areas in Russia, as some market players proposed, prolonging the period for using Euro 4 and even Euro 3 petrol? ‘Given the fact that there is sufficient Euro 5 fuel to cover the overall demand in the country, these delays are not seen as reasonable’, Victoria Gimadi is convinced.
In the expert’s opinion, the export dynamics for diesel fuel is not likely to be affected by the Euro 5 transition, since diesel fuel is traditionally an export product anyhow. "And petrol export dynamics is more likely to be affected by other factors, which went into effect back in 2015, i. e. the lowering of the previously imposed petrol export duties as part of taxation policy, as well as a certain reduction in demand for petrol in the domestic market (a 1.3 percent drop in 2015)," Ms. Gimadi believes.
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