Russia to stop gasoline exports in May to quench local thirst

MOSCOW, April 28 (RIA Novosti) – Russia will suspend exports of gasoline in May in order to meet domestic demand, after almost a week of dire shortages in some regions, Deputy Energy Minister Sergei Kudryashov said on Thursday.

“I think we must satisfy the need at the expense of cutting exports,” Kudryashov said. “We have agreed now that oil companies will supply all their oil products to the domestic market.”

Fuel shortages began over the weekend, when most filling stations not belonging to major oil companies ceased trading because of a lack of fuel in the Altai region in southern Siberia. The deficit later spread further, to the Siberian cities of Tomsk, Irkutsk and Novosibirsk, where filling stations are either closed or sell limited amounts of gasoline.

Shortages were also felt in Murmansk, in the north-west of Russia.

Analysts said oil companies had switched fuel flows abroad where prices are rising while in Russia the government keeps a tight lid on fuel prices ahead of parliamentary elections in December and the presidential poll in March. The Federal Antimonopoly Service says it suspects a cartel agreement between large oil firms, while the Prosecutor’s Office launched several cases against producers.

Kudryashov said Russia had exported 3 million tons of oil products in the first four months of 2011 compared with 3 million tons in the whole of 2010.

In Tomsk, a fifth of buses failed to run for the lack of fuel on Wednesday, and some buses were still not running on Thursday.

“A third of our buses failed to start because there is not enough fuel,” an official at a Tomsk transport company told RIA Novosti.

Tomsk region Governor Viktor Kress said Russia’s top oil company Rosneft would send about 1,900 tons of gasoline to the province within 24 hours and promised to fight with the neighboring Kemerovo region for 400 tons from Gazprom Neft.

“We have been working all night, there were attempts to curb gasoline supplies by Rosneft, but there will be no curbs,” Kress told local parliament. “In this situation we can only ask, stand on our knees. I am the chief beggar here.”

Gasoline price rises were reported across the country at between 2 and 20 percent. Kudryashov said he expected a further 5 percent rise. “Some price adjustment is possible,” he told reporters.

The situation is exacerbated by the fact that the sowing season is near, prompting strong demand for diesel for agricultural vehicles like tractors. Russia desperately needs a good harvest this year if it wants to lift the grain export ban it introduced after last year’s unprecedented drought and to hit the government’s inflation target of 6-7 percent. Prices have risen 4.2 percent so far this year.

Kudryashov said he did not see state regulation of prices as a solution.

“We believe there is no such necessity because we have enough (oil product) reserves,” he said.

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