Boost Game: Oil Workers can get Dampening Relief
The Ministry of Finance is studying the expansion of the range of wholesale fuel prices, which preserves the right of oil companies to receive damping payments. According to Izvestia, regulators are discussing the possibility of allowing oil companies to deviate from the indicative price by 15% and 25% for gasoline and diesel fuel, respectively. This will help to reduce the risks of producers from seasonal fluctuations in demand. Moreover, experts believe that in order to further stabilize the market, it is worth increasing the range to 20% and 30% altogether. According to industry experts, such easing may lead to an increase in wholesale prices for motor fuel and a decrease in the profitability of independent gas stations.
Damping payments to oil companies
The Ministry of Finance of the Russian Federation and oil companies are studying the expansion of the permitted range of wholesale fuel prices, which retains the right to a damper, the issue is at the stage of agreeing on acceptable parameters for all parties. This was announced by Alexey Sazanov, State Secretary and Deputy Minister of Finance of the Russian Federation.
"We are currently coordinating with colleagues and companies the range that would be acceptable both for them and for the state, so that the price does not fluctuate much," the official told reporters.
The damping mechanism was created in 2018 and introduced in January 2019 to curb domestic fuel prices. If the export price of gasoline and diesel fuel is higher than the nominal domestic price, the government compensates companies for part of this difference so that they do not raise prices in the Russian Federation and vice versa. The damper is paid only if the average wholesale fuel price for the month has not increased more than the indicative (conditional domestic) 10% for gasoline and 20% for diesel fuel. The indicative price in 2025 is 60,450 rubles per ton for gasoline and 57,200 rubles for diesel fuel.
According to an interlocutor of Izvestia familiar with the discussion, among the options for changing the range, regulators are discussing the possibility of allowing oil companies to deviate from the indicative price by 15% and 25% for gasoline and diesel fuel, respectively.
According to another source in the editorial office, such proposals are among the initiatives of the Ministry of Energy, which the first deputy head of the Department Pavel Sorokin sent to the Ministry of Finance last fall.
Despite the fact that the Ministry of Finance does not see any prerequisites for an increase in motor fuel prices above inflation, as stated by Alexey Sazanov, Izvestia's interlocutors recall that in 2024, a law was passed in Russia on an additional increase in the rates of a number of excise taxes for 2025-2027, including on motor fuel.
— It is worth recalling that the increase in excise taxes averaged 15%. At the same time, the excise tax in the damper calculation formula is frozen at the level of last year, which leads to a decrease in the amount of payments to oil companies," said Ekaterina Kosareva, Managing Partner of WMT Consult.
According to her, a seasonal increase in fuel demand may lead to the reset of the damper, which, of course, does not suit the oil industry.
Parameters of the damper mechanism
Last year, oil companies already applied to the government with the idea of expanding the range of deviation of stock prices in order for oil companies to receive dampening payments. In particular, the head of Rosneft, Igor Sechin, made such a proposal.
He explained that the moratorium on zeroing out the damping payments is necessary "for the period of stabilization of the situation" in the fuel market. As an alternative, the top manager suggested expanding the allowed range of deviation of wholesale prices so that the damper would not reset. At that time, the Ministry of Finance noted that "the proposed measures to suspend or increase the established maximum deviation of the wholesale selling price of motor fuel will not contribute to price stability in the domestic market." And the issue essentially hung up until it was returned to this year due to the fact that the parameters of the damper mechanism changed due to the introduction of excise taxes.
The press service of the Ministry of Energy told Izvestia that "such agreements are underway."
"The possibility of revising the current ranges is being discussed, taking into account the decisions taken to change the tax system," the department explained.
The Ministry of Finance, Rosneft, Gazprom Neft, Lukoil and Surgutneftegaz did not respond to requests from Izvestia.
Despite the fact that the damping mechanism has been reset only once since 2019, today oil companies want to reduce all possible risks from such an outcome.
— The last and only reset of the damper was carried out in September 2023, when the export alternative index reached record levels: 115 thousand rubles per ton for gasoline, 114 thousand rubles per ton for diesel fuel. At the same time, in 2023, the established average wholesale selling price for gasoline was 56.9 thousand rubles per ton, and for diesel fuel 53.85 thousand rubles per ton," Tamara Safonova, General Director of the Independent Analytical Agency for the Oil and Gas Sector (NAANS-MEDIA), recalled.
Difficulties with fuel in the fall of 2023 were triggered by a number of factors — the impact of sanctions policy, logistical problems, production cuts and rising global prices. Then, to stabilize the situation, the government imposed a temporary restriction on fuel exports, increased the standards for the supply of gasoline and diesel fuel to the stock exchange, and organized daily monitoring of fuel purchases for the needs of farmers with prompt volume adjustments.
Nevertheless, in 2023, according to the Ministry of Finance, oil companies received 1.588 trillion rubles in damping payments, compared to 2.171 trillion in 2022. In 2024, the damper was not reset and the oil workers received 1.815 trillion rubles.
Guarantees of receiving subsidized payments for oil workers
To further stabilize the market, it is worth increasing the range of wholesale prices to 20% and 30% for gasoline and diesel, respectively, says Dmitry Gusev, Deputy Chairman of the Supervisory Board of the Reliable Partner Association.
— Large consumers, such as farmers, buy fuel seasonally. Many of them are "tied up" in government transfers. And when they all receive financing together, they immediately go to the stock exchange for fuel. And if oil companies have an obligation to sell fuel evenly, then buyers do not have such obligations. Accordingly, this leads to a seasonal increase in demand and prices," the source said.
According to him, there may be a situation when oil companies fulfill their obligations, but the damper will not be paid to them.
— I believe that it is necessary to increase the range of wholesale prices to 20% and 30% for gasoline and diesel, respectively, as an option for additional market stabilization, — Dmitry Gusev believes.
According to Tamara Safonova from NAANS-MEDIA, guarantees of receiving subsidized budget payments are extremely important for oil companies.
"In the context of the current export ban, rising infrastructure protection costs, and obligations to implement modernization programs, guarantees of receiving subsidized budget payments are extremely important for refineries," she said.
At the same time, according to her, an increase in the range of wholesale prices is unlikely to lead to an increase in retail prices for motor fuel. Rather, she believes, the marginality of processing.
Ekaterina Kosareva from WMT Consult, in turn, believes that if the wholesale price range increases at the moment, this may have an impact on prices.
"Regulators are monitoring the increase in fuel prices in our country. As a rule, they try to keep them within the limits of inflation. However, I will not rule out price increases in the wholesale segment, and consequently a decrease in the profitability of independent retail chains," the expert added.
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