News in August 2008 | |||
Comments of Sergey Lizunov President LLC TNK-BP Commerce with respect to price situation at fuel market of Ukraine
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Ukraine is an open market, there are no barriers on the way of o/p of foreign producers. Today over half of sold fuel at the domestic fuel stations has foreign origin. Country depends on quotations of fuel at world trading areas and repeats their tendencies with certain time interval. Oil traders need time in order to contract goods with foreign partners, transport it to the border, clear customs, supply to depots and for retail, parallel to that selling balance of prior periods. Oil products flow in operator networks in average comprises 30—45 days.
At world market there is tendency of prices decrease for crude and oil products in third decade of July, while active decline started in August. Total decrease of gasoline and diesel fuel cost for this period comprised 10—15%. Mainly in August gasoline and diesel fuel became cheaper in average by 9% or by 95 $ per ton (460 UAH).
While reacting to price dynamics of international trade areas, fuel price started to go down in Ukraine also. Wholesale segment was the first to feel it. From the beginning of month prices for o/p of Ukrainian operators, including LLC TNK-BP Commerce, already went down by 400—800 UAH per ton. Thus, total decrease of wholesale prices from the beginning of August comprised 9—11%, which even exceeds the trend of external markets.
Meanwhile Ukrainian Refineries found themselves in complicated situation, while selling o/p, produced from expensive July crude (crude price in July comprised 920—930 $/t as compared to expected in August 850 $/t). This one more time confirms the fact that price marker for Ukrainian fuel market is the cost of imported to the country o/p, and not the cost of crude processed by refineries. While local refineries can not artificially reduce or increase prices.
Retail networks have already reacted to wholesale fuel cost decrease. Prices at gas stations of all operators go down: from the third decade of July and until now the price for diesel fuel in average went down by 17 kop/l, gasoline — 10 kop/l.
While analyzing the existing correlation of prices for gasoline and diesel fuel, the following circumstances need to be taken into account. Demand for diesel fuel in Europe witnesses outstripping growth, which has impact on the price. In 2008 it exceeds the price for world market gasoline by 70 $/t. For comparison, in 2007 gasoline price was higher than diesel fuel by 45 $/t. That is why there is nothing surprising about the fact that diesel fuel price became higher than gasoline in Ukraine. In this respect we also observe clear compliance of processes at the internal market with tendencies of international trade areas.
Source: Public Communications Department