Energy exchange: Putin instructed to provide the regions with gasoline faster

The Russian energy system has a high margin of safety, and the enemy will not be able to damage the economy and shake up society. Vladimir Putin said this on July 8 at a meeting with the government. The fuel and energy complex and the transport framework of the country have switched to a special mode of operation to ensure uninterrupted supply of fuel to the regions during the peak summer season. The Cabinet of Ministers and major oil companies have put up a tough barrier against attempts to destabilize the domestic market: a complete ban on diesel exports has been introduced, fuel imports from friendly countries have been launched, and exchange sales standards for direct shipment to end consumers have been lowered. How the authorities will solve the situation in Crimea, where the Russian Federation will take oil products from, and what formulations Novak was unhappy with Putin — in the Izvestia article.

How does the domestic market react to the energy situation

The situation on the fuel market is back on the president's agenda. Vladimir Putin has gathered the Cabinet of Ministers to return to the main topic of the last month. As a result of the Ukrainian Armed Forces attacks on the facilities of the fuel and energy complex, oil refineries were damaged, and as a result, fuel production was partially reduced. The Head of State stressed that the difficulties with fuel in Russia are temporary, and there are no problems with its supply, for example, for the agro-industrial complex this summer.

— It is absolutely obvious that the enemy is trying to damage the economy, but the most important thing is to create a nervous atmosphere in society. You and I understand that this task is impossible, and the safety margin of the Russian energy system is very high, one of the highest in the world," Vladimir Putin said.

Deputy Prime Minister Alexander Novak outlined the situation on the domestic fuel market. According to his estimates, given the summer peak in demand, the situation remains tense. Due to the excitement, domestic demand for motor fuel in Russia jumped by a third immediately compared to the same period last year, which triggered queues at gas stations and increased refueling time. Because of this, the country's transport infrastructure, which takes on peak holiday loads, has also started operating at full capacity.

According to Andrey Nikitin, the head of the Ministry of Transport, key hubs, ports and highways are operating normally, and rail transport in June showed an increase in traffic by more than 4% (115.2 million people). In civil aviation, the situation is manageable: the usual stock of jet fuel at airports has decreased, but due to the stable loading of seats at the level of 90% and transportation of 39.5 million people in five months, the situation can be kept under full control.

In order to maintain the balance, the government had to take emergency measures: all existing plants were loaded to the maximum, previously accumulated volumes were thrown on the market, and the deadlines for scheduled routine repairs at the refinery were postponed to a later date.

Novak noted that Russia is increasing additional production volumes due to lower environmental grade oil products. Earlier, the Russian government allowed the turnover of gasoline conforming to Euro-3 standards by the end of 2026.

The main economic decision of the day was the closure of export channels to stabilize domestic prices: now a complete ban on diesel supplies for all market participants has been introduced in the Russian Federation. Russia is also officially starting to import petroleum products from abroad, allowing the import of fuels of lower environmental classes and extending the zero duty on purchases of fuel and additives for a year.

Banning exports is the fastest way to concentrate fuel resources within the country, but it carries hidden risks, experts warn. Tamara Safonova, CEO of the Independent Analytical Agency for the Oil and Gas Sector, recalls that a similar veto on diesel exports in 2023 led to overstocking of Transneft's tank farms and exhausted the storage capacity of the monopoly, since it was physically impossible to quickly redirect these volumes to the domestic market.

"In this regard, it will probably be necessary to partially lift the ban on the export of diesel fuel with the allocation of limited volumes of supplies to foreign markets by pipeline for each producer," she said.

As for forced imports, with gasoline consumption in Russia at 3.5 million tons in July, friendly Belarus is able to cover about 6% of this demand. Another important channel, according to Safonova, may be the Indian plant in Vadinar, Nayara Energy, where Rosneft acts as a shareholder and may participate in the redistribution of the product. The expert draws attention to the fact that Russia is traditionally a net exporter, and its move into the import segment will inevitably cause a shortage of petroleum products on the world market. In this situation, foreign refineries can only be helped by increasing purchases of Russian crude oil to increase their own refining volumes.

These measures can certainly help restore the balance of supply and demand, agreed Dmitry Scriabin, portfolio manager of Alfa Capital Management Company. As for fuel suppliers, it is possible that, in addition to India and Belarus, imports may be carried out from other countries, he believes.

Siberian limits and the Crimean price tag of 197 rubles

While the center was closing the borders for fuel export, the local governors had to solve the problem with independent gas stations. Out of 29 thousand. Gas stations in Russia are owned by large vertically integrated companies (VICS) of only about 9 thousand stations. Everything else is the private sector, which, after the failure of stock trading due to attacks on civilian infrastructure, was left without guaranteed volumes. In the Irkutsk region, where independent operators held 70% of retail, the situation was stabilized due to the operational intervention of the Ministry of Energy and Rosneft, which increased the daily flow through the network by 80%.

In the Trans-Baikal Territory, where Rosneft owns only six out of 244 gas stations, the situation turned out to be more complicated. Governor Alexander Osipov said that the state-owned company had overstretched its load, increasing its market share from 20% to 40%, while private gas stations were literally on starvation. In the region, limits are set manually every day and networks are transferred to direct contracts. The idea proposed by Osipov to accelerate the creation of a distributed network of mini-refineries was directly supported by Vladimir Putin. The President stressed: "The wider the network, the more difficult it is to damage it." The head of the Russian Federation also added that large companies need to provide fuel to independent gas stations, and not "clamp" the product exclusively within their own distribution network.

The most difficult situation has developed on the Crimean Peninsula, where, due to security concerns and the absence of federal VET systems, logistics has been deformed, and prices have skyrocketed to speculative heights. The head of Sevastopol, Mikhail Razvozhaev, reported to the president that the city receives only a third of its real needs per day, primarily providing life support services.

— It so happened that there were no vertically integrated gas stations on the peninsula, only large private traders work. And due to logistical difficulties and issues related to exchange purchases, the price on the peninsula has now more than doubled. That is, for example, the most popular AI-95 gasoline today costs 197 rubles at official gas stations. Moreover, in the neighboring Krasnodar Territory it costs 73.5 rubles," Razvozhaev said.

The head of the Republic of Crimea, Sergey Aksyonov, outlined the price of resolving the issue: the regions need direct compensation from the federal budget in the amount of about 85 rubles per liter of fuel in order to artificially bring down the retail price to the national level. Alexander Novak confirmed the agency's readiness to "consider in detail" the allocation of subsidies, but the soft wording provoked a harsh reaction from the president.

— Let's agree that the wording will be different. Not just "ready to consider", but to consider and make a decision as quickly as possible. There is no need to delay, we have such opportunities. Actions to support people who live there and have come on vacation should be carried out now, not sometime later. Alexander Valentinovich, work this out with the Ministry of Finance immediately,— Vladimir Putin snapped.

The President set the task for the Cabinet of Ministers to strictly control oil workers, provide a "green corridor" for fuel trucks at checkpoints and launch subsidies to Crimea as soon as possible.