Anatoly Golomolzin: “The situation on the market of oil products is stable”

“Gasoline prices are changing closer to the inflation rate”, stated Deputy Head of FAS Anatoly Golomolzin at a Round Table on 23rd January 2013. The main theme of the Round Table was “Growth of Prices for Gasoline and Diesel Fuel: Expert Forecasts”.

The Round Table was also attended by Deputy Minister of Energy of the Russian Federation, Pavel Fyodorov; the President of the Russian Fuel Union, Evgeny Arkusha; the Director of the Institute of Economics of the Electric Power Industry and the Housing-and-Utility Complex, at the National Research University – Higher School of Economics, Viktor Kolesnik; and the Head of the Laboratory for Forecasting in the Fuel-and-Energy Complex, at the Institute of Economic Forecasting of the Russian Academy of Sciences, Valery Semikashev.

At the beginning of his presentation, Anatoly Golomolzin gave information about the growth of prices on the fuel market. He assured that “prices changed closer to the inflation rate. It is not simply a separate characteristic of the last year: the situation has been in place for the past six years.”

“The stable situation on the market is a consequence of a package of measures for customs-and-tariff regulation, the antimonopoly regulation, and development of commercial infrastructure and modernization of refineries. Fuel prices on the global market increased more than twofold within six years; prices on the Russian market in that period grew by 1.6 times”, pointed out Deputy Head of FAS.

Modernization of refineries under the framework of the quadripartite agreements between oil companies and FAS is very important. According to Anatoly Golomolzin, earlier oil companies declared their modernization plans but only fulfilled them by a half. While the issues were related to technical and energy policy, FAS did not intervene. However, as soon as it became clear that failure to execute the obligations could lead to short supply of fuel to domestic market, and, as a consequence, to an unreasonable growth of prices, FAS went into the question and concluded agreements practically with all large participants of the oil market.

“Antimonopoly investigations carried out by FAS and its regional offices are very important. In 2012, FAS initiated 44 cases; the facts of violations were confirmed in 20 incidents. Ten of those cases related to abusing market dominance (Article 10 of the Federal Law “On Protection of Competition”), and ten cases – to anticompetitive agreements (Article 11 of the Federal Law “On Protection of Competition”). In 2012 the situation with case investigations was relatively quiet; while in 2008, 2009 and 2011 FAS and its regional offices investigated over 100 cases annually. It allows to conclude that oil companies learned their lesson, having paid over 20 billion Rubles to the Treasury for violating the antimonopoly law”.

“Another significant point is that upon the outcome of the investigated antimonopoly cases the oil companies were ordered to sell oil products through exchange. For the second year in a row the volume of oil products sold through exchange exceeds 250 billion Rubles per year. The structure of exchange trading continues improving to the highest standard. The number of transactions at St Petersburg International Mercantile Exchange increased from 12600 in 2011 to 16,900 in 2012. The average transaction volume vdecreased (from 922 tons to 565 tons). The client network continues expanding. Over 1000 companies already take part in exchange trading”, summed up Deputy Head of FAS.

“It is necessary to complete producing the regulatory framework for competition between oil products”, emphasized Anatoly Golomolzin. “For instance, the “third antimonopoly package” established the conditions, complying with which market prices are formed through exchange trading. Then FAS issued an Order approving the Procedures for providing a list of affiliated persons to an exchange by an economic entity that has dominant position on a relevant market, accredited and (or) participating in trading”. Mr. Golomolzin also discussed No.1035 Decree of the Government of the Russian Federation of 11th October 2012, which approved the criteria for regularity and equitability of selling goods through exchange for particular markets where oil and (or) oil products circulate.

Currently FAS has devised the Order “On Establishing the Minimum Value of Oil and Oil Products Sold through Exchange, Produced and (or) Sold by Economic Entities that Have Dominant Position on the Relevant Markets, and Approving the Requirements for Exchange Trading, in the Course of which an Economic Entity that Has Dominant Position in the Relevant Markets Concludes Transactions with Oil and (or) Oil Products”. The final meeting with the Ministry of Energy is scheduled for 24th January 2013.

According to Anatoly Golomolzin, adopting the draft laws “On the Specifics of Circulation of Oil and Oil Products in the Russian Federation”, “On Market Pricing for Oil and Oil Products in the Russian Federation” as well as “On Introducing Amendments to Article 193 Part 2 of the Tax Code of the Russian Federation” devised by FAS will enhance stability of price environment on the domestic market of oil products.