ANATOLY GOLOMOLZIN: WE WORK TO FORM BENCHMARKS ON DOMESTIC AND EXTERNAL MARKETS

Deputy Head of FASexplained the pricing trends on Russian and international oil markets and their prospects at the “Russian Energy Week” International Forum

The event got together representatives of specialized ministries and international organizations, world and Russian energy companies, SPIMEX and MOEX, and the leading experts in this area.

Anatoly Golomolzin highlighted that in Russia exchange trade is one of the key elements of the state competition policy. He reminded that No. 618 Order of the President of the Russian Federation “On the main directions of the state policy for developing competition” of 21 December 2017 had emphasized the importance of such efforts.

Deputy Head of FAS pointed out that “exchange trade helps markets, particularly, oligopolies, be competitive. Oligopolistic structure of oil and oil products markets, for example, is typical not only for Russia but also for other countries”.

Anatoly Golomolzin described the work of FAS Exchange Committee, formed by the Bank of Russia, FAS and the Federal Tax Service to develop on-exchange trade and create objective market indicators to advance market performance. The Committee works with the interested bodies, infrastructure organizations (Exchanges) and market participants. FAS holds more than 200 meetings of the Exchange Committee annually, while around 500 different bodies and entities are involved in the work of its Sub-Committees.

‘Efforts are undertaken to form reliable benchmarks for both the domestic and external markets”, pointed out Anatoly Golomolzin.

“More than 400 price indices are published regularly at the Exchange, including quotations for oil and oil products. The annual volume of exchange trading on the market of physical goods in Russia reaches around 1 trillion RUB, on the market of derivatives - about 20 trillion RUB”, informed Deputy Head of FAS.

Commenting “Urals” benchmarking, Anatoly Golomolzin said:

“The work on deliverable futures contracts continues. We are at the stage of preparing for export deliverable futures for Urals oil, but the scope of trade with deliverable futures for petrol and liquefied petroleum gases has exceeded 130,000 tons. The sales pattern is expanded from 3 months to 1 year. It changes radically the market environment, creates risk hedging mechanisms, and gives opportunities to optimize pricing”.

“We expect to launch deliverable futures export contracts for oil products in the near future”, underlined Anatoly Golomolzin.

“Off-exchange transactions are registered on the exchange at a regular basis. The registration procedure is established by the Government of Russia. Off-exchange indicators formed on those data are transparent and reliable, and reflect actual deals. Annual registered oil exchange contracts reach 520 million tons, of which 250 million tons are export contracts and the remaining part – deliverables for the domestic market. We register oil products contracts for around 300 million tons. And 630 million tons coals contracts are registered annually; such volumes and the quality of information are incommensurable with the data that international informational-and-analytical agencies operate”, explainedDeputy Head of FAS.

Then Anatoly Golomolzin touched possibilities for using price indices:

“We are discussing different options for exchange trade development on the basis of future contracts for price indices. We are ready to launch contracts for coal, kerosene, and oil. To develop this area of exchange trade, for example, amendments are drafted to the Governmental Decree clarifying the transaction reference details”.

“The goal is to make sure that developed trade on foreign price indices is added and expanded with the trade on domestic price indices. MOEX trades Brent, WTI contracts. It is important to start trading contracts on price indices for Urals, ESPO”.

“In total, the measures towards developing exchange trade create conditions enabling sustainable development of commodities and financial markets. On- and off-exchange indicators as well as comparable foreign analogues are used not only for the needs of business or antimonopoly control but also in the tax policy, tariff-setting, to optimize budgetary spending, customs control, public procurement, etc.”, continued Anatoly Golomolzin.

Finally, Deputy Head of FAS stated: “We work to form the common exchange space in EAEU and CIS”.

He added that exchange trade and off-exchange prices form the basis for building up the common markets of oil and oil products in the EAEU member-states that will be created by 2024.