01 March 2010, Monday, 14:11

The FAS offers three variants of oil cost calculation

author: Lubov Kolokolova

The Russian Federal Anti-Monopoly Service stands on the crossroads: what formula has to be applied to calculation of the cost of oil products? In the nearest month or slightly more the Russian Government has to determine what of three formulas, offered by the anti-monopoly institutions should be applied to calculation of oil cost, the deputy director of FAS Anatoly Golomolzin said. In opinion of both the experts and the representatives of Russian oil companies these three variants are not very different and hardly able to influence on the prices. One of the variants mentions the “Novo-Ufimsky refinery”.

Thus, in accordance with the first variant the cost of oil products is determined with the help of sheer net-back for every refinery. The net-back method is based on the price of oil products on the largest trade sites – in Rotterdam, in Singapore and on the Mediterranean site. According to the formula the export fees and the transport constituent will be deducted from the oil cost and after that the size of the tax the company pays on Russian territory will be taken into account later.

The second variant presumes the usage of the bonus net-back according to which the prime costs are formed, coming from the cost of the “Kirishsky refinery”. According to the third variant the “Novo-Ufimsky refinery” should be used as a reference plant because it is equally distant from the main consumption centers and isn’t found in the staff of any vertically integrated oil company. The last variant is considered by FAS as the optimal.

In opinion of the experts all three schemes will entail one and the same negative consequences. Thus, the “Kirishsky variant” permits the oil companies to gain high profits at once because sales here are not the centers of profits. “It will liquidate the competition between small filling stations and the large companies” – the head of the management company “UNIVER” investment analysis department Dmitry Alexandrov considers. The analyst of the management company “VELES Capital” Dmitry Lutyagin agrees with him because in his opinion taking the oil lobby into account the final decision will be made in favor of that variant, which gives the oil companies at least the 20%-extra charge.

“The net-back is more profitable for the consumers because this step would be able to reduce oil prices substantially but the variant with bonuses is more interesting for the oil companies because the usage of the export-oriented “Kirishsky refinery” as the model would allow preserving a higher margin” – the expert said.

According to the analysts no qualitative changes occur while the oil processors face no incentive to produce more oil products. “It would be possible to gain real reduction of prices thanks to stimulation of the oil companies to produce more but the FAS is busy only with the reduction of the retail prices but it will result in reduction of oil processing by the companies  and the remains of oil will be exported” – Dmitry Alexandrov explained. The reduction of the excise on high-octane oil fuels and the increase of the number of refineries in the country also would be able to change the situation. “It is necessary to establish many independent enterprises with the aggregate volumes of oil processing at least 15 million tons and at that these enterprises must be affiliated not with the big companies but with the networks of filling stations” – the expert believes.

Specialists of the oil companies consider the further movement towards development of exchange oil sales would be the best variant.