Russia bans diesel, gasoline exports to stabilize domestic market

Russia has introduced a ban on exports of diesel and gasoline, according to a government decree published Sept. 21.

The ban includes finished grade gasoline as well as summer, intermediate and winter diesel grades as well as heavy distillates including gasoil.

The ban, which will be enforced from the day of its official publication, includes also volumes purchased on the exchange floor but excludes exports to countries within the Eurasian Economic Union which are foreseen under intergovernmental agreements.

The Eurasian Economic Union includes Armenia, Belarus, Kazakhstan, Kyrgyzstan and Russia.

Other exceptions listed in the decree include exports for humanitarian help, exports as part of intergovernmental agreements as well as exports for Russian military on the territory of foreign countries.

The measure was aimed at stabilizing prices in the domestic market by helping to increase supply, the energy ministry said, adding it will also help stop so-called grey exports.

Spot prices, first of gasoline and then diesel, surged to record highs this summer in Russia, pushing retail price rises above the level of inflation.

Grey exports are when product purchased on the exchange floor and earmarked for domestic consumption and for which producers have been paid compensation under the government's road fuel-damping mechanism has nevertheless headed to export destinations.

The government also noted that it had already increased the minimum volumes companies sell on the exchange floor.

The obligatory minimum volumes that producers are required to sell on the St. Petersburg exchange has increased by 1 percentage point from Sept. 1 to 13% of output for gasoline and 9.5% of output for diesel.

The government also said it was monitoring daily the volumes offered to the agricultural sector.

Earlier, the ministry of agriculture noted shortages of supply for the farming sector during the peak autumn harvest and planting works.

Russian authorities suggested earlier in September they were looking at a variety of measures aimed to restrain the surging prices and shortages that had resulted in some retail stations running out of fuel.

Amid the potential measures flagged this week was a prohibitively high export duty which would be refunded to those who supplied sufficient volumes for domestic consumption or an outright export ban.

Prices subsequently started coming off on the exchange floor this week, after rising throughout the summer, with premium unleaded gasoline leading the fall. As of Sept. 21, gasoline and diesel prices recorded significant drops on the St. Petersburg exchange, according to market sources.