Gasoline prices could rise In September because of new supply channels

Prices of all brands of gasoline could rise in the period of September-October 2013 because of reorientation to alternative sources of fuel supply, the press service of the Consulting Group A-95 market research firm has announced.

"This is due to unexpected disruptions in the traditional supply chain. A breakdown in the catalytic cracking unit of the Mozyr petroleum refinery (Belarus) at the beginning of August led to unscheduled repairs at the refinery and a significant reduction in gasoline supplies to Ukraine. This major supplier of petroleum products to the Ukrainian market (about 35% of total supplies in the first half of 2013) will shut down in September for a two-month scheduled repair," the press service said.

According to calculations by analysts, the supply shortage in August will be about 100,000 tons or 25% of the expected volume of gasoline consumption. A similar shortage is expected in September. "The situation is very tense, considering the fact that the market also operated with shortages of 50,000 and 60,000 tons in June and July, respectively," said Consulting Group A-95’s Director Serhii Kuiun.

According to the expert, previously accumulated reserves were actively used to meet demands from consumers, and these reserves were severely depleted in August because of the reduced supplies caused by the force majeure.

The market will be forced to reorient toward other areas because of the problems involving purchases from Belarus. In particular, gasoline supplies from Lithuania and Poland (from the Orlen concern’s refineries) are expected to increase by 30,000-40,000 tons, supplies through the Feodosia oil depot (VETEK, Lukoil, WOG, and Galnaftogas) by 40,000-50,000 tons, and supplies through other ports and land borders (Hungary, Turkmenistan, and Mediterranean countries) by 10,000-20,000 tons. Petroleum products from the Odessa petroleum refinery (about 35,000 tons per month) are expected to flow onto the market in the second half of September.

Analysts with Consulting Group A-95 emphasized that resource discomfort is expected only with respect to motor gasoline and that the situation involving diesel fuel is not yet a source of concern.

Experts with the firm believe that the government may take the following measures to normalize the situation: extend the use of the 2001 quality standard until the end of the season with the aim of allowing gasoline from the Shebelynsky gas processing plant (about 30,000 tons per month) to enter the market; instruct the state railway administration (Ukrzaliznytsia) to prioritize provision of rolling stock to suppliers of petroleum products to the domestic market, particularly suppliers through seaports; instruct the Ministry of Revenue to ensure quick customs clearance of gasoline.

In general, according to the press service, the price of gasoline could increase by 20-30 kopecks per liter in the autumn and prices could rise even further if the world price of crude oil rises.

Adapted from cfts.org.ua