“All key issues of developing exchange trading and establishing oil benchmark are agreed upon or solved”
Deputy Head of FAS Anatoly Golomolzin made this statement on 24 June 2016 at the 6th International Conference Argus “2016 Russian Oil Market”, where he delivered a report about “Russian oil benchmark”.
According to Anatoly Golomolzin, benchmarking of Russian export oil is done to execute the decisions of the Government Commission on the Fuel-and-Energy Complex. Adequate market indicators are exceptionally important got goods as well as financial markets. “Benchmarking for goods markets facilitate developing fair competitive conditions, and establishing proper tax base. Reliable price indicators on the physical goods market encourage risk hedging in highly volatile fields through derivatives”. In its turn it stimulates sustainable development of financial markets. “In view of the role played by Russia on the world raw goods markets, it forms a reliable foundation and opens opportunities for developing Russia as one of the global financial centres”.
Oil and petrochemicals benchmarking was in the focus of continuous attention not only by FAS but also our colleagues from most of countries across the world. In particular, an international Working Group was formed comprising representatives of 20 antimonopoly bodies from different countries. FAS and Austria competition authority initiated and co-chair the WG. “The work showed that establishing international price indicators on the oil market is of key importance for national pricing”.
Together with the Bank of Russia and the Federal Tax Service, FAS uses the Exchange Committee site to prepare on a weekly basis, with involvement of SPIMEX, oil companies, and “Transneft”, for benchmark on the basis of export futures contract for Russian oil. “We understand that launching Russian benchmark means not only normative legal regulation but also changing the procedures and work order of the companies themselves. Oil companies must be ready to work in the new conditions in a new capacity”.
The status of “Transneft” is being changed. From a transport company technologically supporting exchange trading “Transneft” is becoming a supply operator. “Now exchange trading takes place on two bases: railway and pipeline. There is a discussion on integrating them. It will put relationships on the market of oil and petrochemicals to a new quality and stimulate sustainable work of the commercial infrastructure on this market”, emphasized the speaker.
The company has possibilities to support the proper level and sustainability of oil supplies to the domestic markets and for export. The tariff-setting system and non-discriminatory access control are conducive to it. “The tariff regulation parameters are foreseeable and are determined by the Government for ten years ahead. It means that tariff incentives for sustainable export oil supplies are normatively supported. We are also discussing improvements in normative procedures for access to the “pipe”, drawing up and executing oil transportation schedule factoring in exchange trading”, said Anatoly Golomolzin.
Exchange trading is also one of the priorities in the CIS, particularly, within EAEU.
“Earlier the Council of the Head of CIS Governments considered and approved a report on developing oil and petrochemical markets drafted by the Headquarters on Joint Investigations in the CIS at the Interstate Council on Antimonopoly Policy. In 2016 the Presidents of our countries approved a concept of EAEU oil and petrochemicals markets, the core of which is market pricing on the basis of exchange trading”.
Antimonopoly bodies of BRICS economies also see establishing world oil benchmark among their priorities.
“BRICS countries will determine the economy of the future. We work on the multilateral basis as well as bilateral agreements, particularly, with our colleagues from China. It is important to synchronize the efforts, since the exporter countries that are ready to form benchmark of the physical goods markets as well as derivatives market and the countries that are the largest oil importers must come up with similar approaches”.