Energy ministry to coordinate oil production with supplies to domestic market.

13/7 Tass 184

MOSCOW, July 13 (Itar-Tass) —— The Russian Energy Ministry plans to submit its balance of oil production and supplies to the domestic market to the government within about next two months, Energy Minister Sergei Shmatko told a briefing on Wednesday.

According to the minister, the balance will include the ministry’s proposals pertaining to how coordinate the amounts of the country’s oil production with the supplies of petroleum products to the domestic market.

In his words, just this problem still remains underworked. “Up to date, our responsibility before the domestic market has not been formalised in full,” the minister said.

Shmatko believes that this step should lead first of all to the development of competition. He specifically state that the proposals of the kind would not become an additional burden for business, but will feature the current situation on the domestic market.

While addressing the conference on the development of the oil industry that was held in the town of Kirishi (Leningrad region) on July 8, Prime Minister Vladimir Putin pointed to a certain shortage of petroleum products existing on the domestic market, despite the growth of oil production in the country.

The prime minister named this situation as an absurd.

“Last year, Russia became the world’s leader in terms of oil production [about 505 million tonnes],” the prime minister said back then, adding, “This is an optimal amount of crude, which can fully meet both our [domestic] and export demands.”

“We must keep exactly this level of oil product in the upcoming years,” Putin said, adding, “This year’s forecast envisages the country’s oil output at 508 to 509 million tonnes.”

“At the same time, we regularly face problems on the domestic market of petroleum products, which is an absurd situation for a leading oil producer,” the prime minister stated.

Putin believes that such a situation is mainly caused by the fact that the country refines only less than a half of oil that it produces. Besides, the question is about the preliminary processing.

As for deeper processing and production of high-quality fuel, Russia has no such technologies.

Putin also pointed to the changes in the production-consumption structure of petroleum products.

For instance, gasoline production increased by 12.8 percent, while consumption grew by 22.6 percent. Besides, production of diesel fuel went up by 17.4 percent, while consumption – by 20 percent, the prime minister said.

“Therefore, we have got a disproportion between production, refining and supplies of petroleum products on the domestic market. The operating facilities are outdated. Preliminary processing dominates the deeper refining, while our processing industry over its products rolled back to the level of the 1950s,” Putin said.

“As a result, the domestic market’s margin of stability is insufficient. Therefore, any incident or seasonal fluctuations can cause destabilization and provoke a deficit and hike of prices,” he said.

“Our demand for petroleum products increased to 90 million tonnes and they will continue growing in the future,” the prime minister stated. “Shortage of oil products and hikes of prices should not restrain economic growth and become a source of problems for Russians,” he said.

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