After the security forces blocked the activities of the Glusco gas station network, the Swiss trader Proton, which provided a fifth of the supplies of all diesel and autogas consumed in Ukraine, announced the suspension of activities. It has not yet been possible to replace the trader and replenish the volume of shipments. This significantly increased the tension on the oil products market, which was already going through a difficult time: the cost of autogas at the gas station stelae has already exceeded 0,58 USD/liter, diesel fuel is confidently approaching the 1,08 USD/liter, and A-95 gasoline - 1,08 USD/liter stepped over confidently. It will be even hotter further, experts warn. In the second half of April – May, the situation on the market will be determined by an acute shortage of fuel, which will provoke a rise in prices. Even a 5% shortage in the general balance of consumption of any type of auto fuel is enough for the price to rise by one and a half times. This was already the case with liquefied gas in the summer of 2017, experts remind.
Law enforcers and the fuel market
At the height of the sowing campaign, which traditionally consumes the lion's share of the country's diesel fuel reserves, and on the eve of seasonal growth in auto gas consumption in the warm season, the Ukrainian market, dependent on imports of petroleum products, was left without a cheap resource supplied from Rosneft's Russian refineries. The only supplier of these products, the Swiss trader Proton Energy Group S.A., was forced to stop shipments to Ukraine from April 1. At the end of last year, the trader accounted for 23.4% of all diesel fuel supplies and 22.3% of autogas – more than one-fifth of the country's consumption.
Proton warned contractors about stopping supplies in advance - in mid-March. The last straw for the trader was the large-scale searches of the security forces at the facilities of the Glusco gas station network. The security forces paralyzed the operation of the fuel network and the ability to fulfill obligations to wholesale buyers. The stations were also attacked by radicals from the National Corps. They block the entrances to the gas stations of the network with concrete blocks and paint the facade, doors, and windows.
The events were preceded by the illegal seizure of a technological volume of diesel fuel with a market value of about $ 75 million, which the National Anti-Corruption Bureau (NABU) blocked at the Ukrainian section of the Samara - Western Direction oil product pipeline, owned by the PrykarpatZakhidtrans company. After that, the National Security and Defense Council decided to nationalize the oil product pipeline, which led to a complete halt in the operation of the pipeline. "As an asset, the oil product pipeline is interesting only when it works and generates profit. Without work, the pipe only creates significant losses - it needs to be serviced and protected," a high-ranking source from the president's entourage explained to our correspondent the logic of the authorities' actions towards the pipe. The authorities do not hide their goals – they wanted by any means to stop the operation of the oil product pipeline and inflict losses on its owners.
On similar grounds, the security forces "nightmarizes" the entire market. Market participants were called and demanded to abandon the Proton resource. Wholesalers and large fuel networks that worked with the Swiss trader were reasonably afraid that behind these warnings there was a real threat of immobilization for various reasons of the volumes of oil products they purchased, including at the border. This threatened huge financial losses.
“After Proton Energy and Nisan Moiseev left the market, everything has become clear: his business in Ukraine was under the pressure of the security forces. He decided not to wait until these problems spread to his counterparties - the country's largest companies,” 112ua.tv director of "A-95" Serhiy Kuyun.
Acting in this way, the authorities deliberately took the risk of creating price tension in the fuel market. A source close to the president confirmed that they did not even try to hold consultations with Rosneft, the resource of which was supplied by Proton. The bet was made on the fact that the company would not want to lose the Ukrainian market and would quickly find a replacement for Proton itself.
Coral Energy could become a new trader, but there are still no supplies and will not be available in April.
“Coral is a trader with Azerbaijani roots - the company has offices in various countries. It is well known in Ukraine, it brings large volumes by sea, supplies from Belarus. this creates a lot of nervousness,” Serhiy Kuyun told.
Prices at gas stations
Ukraine needs to prepare for the worst-case scenario. As you know, the auto fuel market is very dependent on imports in general. Last year, Ukraine imported 84% of diesel fuel, 79% of autogas, and a half (51%) of all gasoline consumed in the country.
There are only two ways by which we can provide ourselves with imported oil products - by sea and by rail from Russia and Belarus. Sea shipments are traditionally expensive - not only because oil products are purchased from the ancestral lands of European traders, but also because of the logistics: after ships arrive at the port, the freight of which costs a pretty penny, oil products are loaded into rail tank cars. Until recently, the supply of oil products from Russia and Belarus by rail was an alternative that mixed prices downward.
The most profitable way of transporting diesel to Ukraine was the PrykarpatZakhidtrans pipeline. Pipeline deliveries were cheaper than rail logistics and expensive sea transshipment. The pipeline resumed operations in 2017 thanks to Proton Energy Group S.A., which signed a fuel supply contract with the Hungarian concern MOL. Proton and other European companies have invested more than $ 550 million in the restoration of the Ukrainian pipeline project.
In the past three years, the loading of the oil product pipeline has decreased, the main reason was the introduction in the summer of 2019 of a special duty of 3.75% (then it was increased to 4%) on pipeline supplies of Russian diesel fuel. As a result, if in 2018 imports through PrykarpatZakhidtrans amounted to 1.98 million tons (30.5%), then in 2019 - 1.23 million tons (17.76%), and in 2020 - 635 thousand. tons (8.57%), which did not contribute to the weakening of prices. Its complete stop, which occurred as a result of the NSDC decision, did not add optimism to the situation.
Since winter, under the influence of global trends, the Ukrainian oil products market has been going through difficult times. According to price monitoring data of the A-95 consulting agency, on April 2, the average price of autogas, which cost 0,4 USD/liter in cold months, reached UAH 0,6 USD / liter. The price of diesel fuel from the level of 0,9 / liter increased to 1 USD / liter. Gasoline A-95 has grown from 0,9 USD/liter to 1,1 USD/liter. And these are only average values. On the stelae of the largest gas station chains, prices are already significantly higher than these indicators.
There is no doubt that the market is living out its last calm days, which will soon be followed by a rally. The stoppage of supplies by Rosneft in April paints a hole in the balance of the diesel fuel market in the amount of 150-220 thousand tons. At any of the values of this range, it will not be possible to avoid the limited supply and rise in prices, writes the Enkorr edition.
"It is impossible to say more precisely what will happen to prices now. It is not clear how the situation will develop. One thing is clear - the price will rise. How much? It is difficult to predict. It all depends on the depth of the deficit. Sometimes a 5% shortage is enough for the price to rise by one and a half. times, as was the case with liquefied gas in the summer of 2017," Serhiy Kuyun told 112ua.tv.
In April, retail prices for autogas fully reflect changes in wholesale prices. But in May the situation remains in doubt, Vladyslav Kolodyazhny, CEO of GT group. "The presence of balances that are rolling over since March and the spots purchased for April, together with the intensification of supplies from alternative directions, allows us to optimistically look at the filling of the balance in April, but these flows are clearly not enough for May. The lack of Rosneft's volumes in May might lead to another jump in prices against the background of rush purchases of spot volumes and "high" adjacent markets," the expert says.
Nobody dares to predict the exact values on the steles. There is a clear understanding that they will definitely not decline, and moderate expectations for growth within 0,03 USD/liter are no longer relevant.
An additional factor of upward pressure on prices will be the departure in May for scheduled overhauls of the key supplier of oil products (gasoline and diesel fuel) to Ukraine from Belarus – the Mozyr Oil Refinery. The Novopolotsk refinery stopped at the end of March.
Ordinary Ukrainians to pay for everything
The authorities operate without insurance. By depriving the Ukrainian market of a fifth of the consumed volumes of diesel and autogas, destroying the shipping system that worked like a clock, the Ze-team did not create any tools and real levers with which it would be possible to stop the frenzied rise in prices. As expected, it will fall on the shoulders of ordinary consumers.
Even theoretically, the creation of stabilization reserves of petroleum products and market instruments of resource interventions to prevent speculative and agiotage growth in prices for petroleum products is not discussed.
Until now, there is nobody for controlling the market, a system for monitoring the price situation, which would make it possible to understand what is happening on it and take proactive steps to stabilize it.
The only initiative proposed by the authorities caused a storm of criticism and was not accepted by the market. The Ministry of Economic Development, Trade and Agriculture sent a draft resolution to the government for consideration, which provides for the introduction of state regulation of fuel prices during the quarantine period. In particular, it is envisaged to submit information on price changes in the electronic form to the State Food Service 20 days before the increase.
Today, one-fifth of gasoline and one-third of autogas volumes are being illegally sold in Ukraine.