Fuel oil can’t stand new manoeuvre, primary oil processing decreases

Three weeks after the beginning of the tax maneuver there are the first signs that oil companies reduce the production of oil in favor of crude oil exports. Market participants believe that as long as we are talking only about the consequences of traditional seasonal problems with the export of fuel oil together with falling export efficiency because of the "scissors" of export duties. But if the trend of reduction of primary processing is confirmed, it will lead to the increase in budget revenues and at the same time can worsen the supply of automotive fuel to the market.

In January, Surgutneftegaz is going to reduce the oil processing at Kirishi refinery by5% and - instead of this – to supply about 100 thousand tons of oil for export, a source in the company told the Reuters. Interlocutors of the Kommersant on the market confirm this information. According to them, there is a glut on fuel oil and to a lesser extent on diesel fuel, which may force the oil companies to reduce the refining. Growth of oil exports with simultaneous weak production change indirectly evidences the reduction in the primary processing in January: for example, by results of the month, Transneft expects the increase in exports by 1.5 million tons (about 3%) as compared with last December.