OREANDA-NEWS. July 11, 2011. FAS send letters of warning to eight oil companies – “LUKOIL” OJSC, “Gazprom neft” OJSC, “TNK-BP Holding” OJSC, “Rosneft” NK” OJSC, “Surgutneftegaz” OJSC, “Tatneft” OJSC, “Aliance” NK” OJSC and “Bashneft” ANK” OJSC – to adjust domestic prices in line with the market conditions, reported the press-centre of FAS Russia.

As a result of dropping global prices and changing the rates of export duties, domestic prices should have been reduced to an economically efficient level in accordance with the principle of equal efficiency of supplies to domestic and external markets.

At the beginning of May 2011, FAS already send a letter to the oil companies urging them to take measures to reduce prices for oil products.

Majority of oil companies referred to the time lag between reducing net-back for oil products and domestic prices (about 2-3weeks).

At the same time, according to informational-and-analytical agencies and other sources of information, in May – June 2011 domestic market steadily demonstrated higher premiums in comparison with global prices. Currently domestic market premium for diesel fuel reached 1500 - 3000 Rubles/ton, and for petrol - from 4000 to 6000 Rubles/ton.

In June 2011 global quotations for diesel fuel and petrol reduced by 12 and 17% (accordingly) in comparison with the beginning of May, and net back - 17 and 22% (accordingly). At the same time refineries cut down domestic prices by no more than 2-3% (prices for АI-95 petrol even increased by 3%), while prices in the small wholesale and retail segments display a tendency to increase.

Therefore, neither the downward global trend, nor the protective measures on domestic market – increasing rates of export duties, have not had considerable impact on the price behavior on domestic market.

In June 2010 retail prices depended on the costs of petrol at refineries – 75 - 80%, further sales at petroleum storage depots - 5 - 7%, and retail margin – 13 - 16%. In the same period of 2011 the balance has changed: the share of refineries impact has increased to 82-83%, the small wholesale segment – increased to 9%, and retail margin decreased to 7- 8%.

Accordingly, the level of fuel prices is affected mostly by unreasonable growth of prices and price behavior in the wholesale and small wholesale sectors. At the same time, the rights and legitimate interests of independent service stations are infringed.

FAS Russia requests that oil companies reduce wholesale prices for oil products in line with the market conditions.

If prices are not adjusted in accordance with the market situation, FAS can initiate new antimonopoly cases.

Reference:

FAS Russia is already considering cases against three largest vertically-integrated oil companies – Lukoil, Rosneft and Gazprom Neft. The Antimonopoly Service suspects that these companies abused dominance on the wholesale market of oil products (monopolistically high prices, unreasonably growth of prices due to artificial shortage, discrimination of independent service stations).

Since the end of 2010, regional offices of FAS Russia have initiated over 60 cases upon the signs of violations on the regional markets of oil products throughout Russia.