MOSCOW: Top oil producer Russia risks petrol shortages next year as its refineries fail to keep up with tighter emission standards, which could embarrass President Vladimir Putin and force Moscow to send Belarus more cheap crude in return for fuel.
Russia has insisted on introducing cleaner petrol requirements although many of its refineries have not been upgraded and Putin’s government needs imported fuel to avert politically damaging queues at the pumps.
This will weaken Russia’s hand in annual talks with its ex-Soviet neighbour Belarus, which exports gasoline and diesel refined from subsidised Russian crude oil deliveries and wants more to bolster its struggling planned economy.
Russia has already made its crude-for-products offer but Belarus is holding out for a steep increase, creating uncertainty for Europe’s oil market, which lost pipeline supplies to Europe via Belarus during a price dispute between Moscow and Minsk in 2010-2011.
“The situation in the spring of 2013 will be quite similar to what we had in 2011: constant crisis meetings, daily supply/demand calculations, accounting for every tonne at every petrol station, just to keep the fuel flowing from the pump,” a Russian oil products trader said.
If that scenario arises next spring, it is likely to fuel discontent among voters who recently returned Putin to the Kremlin for a third term as president but amid street protests.
The problem has arisen because Russia will phase out Euro II petrol and diesel, out of circulation in Europe since 1996, from the new year to come closer to EU emissions standards and spur output of quality fuels to meet rising domestic demand.
This year, Russia’s Energy Ministry has estimated that the change in petrol specification to reduce emissions of sulphur, a cause of lung disease and acid rain, would exclude 800,000 to 1 million tonnnes from Russia’s gasoline pool, around 2.7 percent of annual consumption. Russia’s previous attempts to exclude Euro II petrol have aroused political tensions in the run-up to elections and have led to postponements.
Russia holds out the prospect of increased deliveries next year if Minsk guarantees to send gasoline back to Russia and it already unexpectedly increased crude oil supplies to Belarus for November and December. Reuters
