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Tuesday, October 25, 2016

Russia is depriving Ukraine of fuel for tanks and tractors

Entered into force a ban on the supply of Russian diesel fuel to Ukraine – just as it was a year ago. Then this was tied to fears of fuel use by the Ukrainian armed forces. Apparently, now Moscow could pursue the same goal. Of course, Kiev will eventually find a replacement, but it will stand him a pretty penny.

Transneft has ordered the Russian Central energy customs (tset), where it is reported about the cancellation of the Federal service for technical and export control of Russia (FSTEC) reports issued by the Russian participants of foreign economic activity on supply of oil products to Ukraine.

“Such a ban could serve two purposes – to harm the Ukrainian collection of the crop or to weaken the military positions of the ATO in Donbass”

“In order to ensure export control legislation we are asked to stop the transportation of petroleum products to Ukraine”, – said Advisor to the President of Transneft Igor Dyomin, transfers “Interfax”. We are talking about diesel fuel. Demin said that the pumping of diesel fuel is cyclical. “We alternately pumped volumes in the direction of Ukraine and Belarus”, – said Demin.

According to him, now pumping is in the direction of Belarus. “Ukraine pumping was to be resumed in the night from Sunday to Monday. Now she obviously will not resume until the exporters have not received any new conclusions FSTEC”, he added.

Ukrainian media reported that FSTEC reset most of the previously issued permits to exporters. Clarifies that have stopped delivery not only Transneft, and LUKOIL.

“On Friday most of the permits issued previously FSTEC zeroed. Delivery stopped. Ukrainian company urgently serves new documents to unblock a Russian import. Information about the reasons for such a move controller the Russian suppliers do not have”, – said the Ukrainian portal OilNews one of the importers of diesel fuel in Volgograd. Appropriate notice of the decision FSTEC Russian resourcedirectory sent the majority of Ukrainian contractors, the newspaper writes. “Deliveries already contracted resource continues. However, new shipments not shipped”, – quotes the edition of words of the source.

Structure of imports

Russia is not the first time restricts the flow of diesel fuel to Ukraine. Exactly a year ago, has already stopped deliveries of diesel fuel by Rosneft and LUKOIL. Exports from Russia’s LUKOIL were resumed this spring. Transneft (via supplier Rosneft) started deliveries in may 2016.

The return achieved for obvious reasons, given the growth in demand for diesel fuel and diesel fuel since the beginning of the sowing campaign. The business has over politics. And by the end of July Russia was able to recover one-third of total imports of diesel fuel in the country. The secret is very simple: the Russian fuel – the cheapest imported fuel in Ukraine.

The main supplier of diesel fuel in Ukraine has been and remains Belarus, which, of course, supplies oil products processed from Russian raw materials. So, according to the Ukrainian consulting group A-95, in July 45% of imports of diesel fuel fell on Belarusian suppliers, whereas in previous months, Belarus held three-quarters of total imports. A major factor in the decline of the Belarusian share was the increase in supply from Russia to 142.5 thousand tonnes, which is 32% of total imports. While 68 thousand tons made up of pumping Russian DT on the pipeline “Precarpathians”, which is owned by Transneft. The pipeline has repeatedly been the subject of fierce disputes between Russia and Ukraine, which wanted him to literally “squeeze”. Another supplier of diesel fuel to Ukraine is Lithuania. However, in July factory Orlen Lithuania decreased by 5 thousand tons.

The reasons for the ban

The reason for the suspension by Russia of deliveries of diesel fuel to Ukraine is not yet known. However, experts believe that such a ban could serve two purposes – to harm the Ukrainian collection of the harvest, which is now in full swing, and also to weaken the military positions of the ATO in the Donbass. And the second goal looks more likely.

From September 1, managed to achieve a truce in Eastern Ukraine. There is a relative lull: the number of attacks on the front lines could reach hundreds a day, from September 1, it had dropped to 20. But for the past two days there has been an increase in attacks. In General, experts believe that the conditions for long-term preservation of the truce a little. A truce the enemy can use for regrouping, tightening of resources, both technical and human. And one of the most important such resource is diesel fuel for military equipment. It is mainly used tanks and armored personnel carriers.

It is significant that in September last year, Russia restricted supplies of diesel fuel to Ukraine. And right then, the Russian authorities explained that the purpose of the restrictions is to prevent the use of Russian fuel to Ukraine’s armed forces.

“I do not exclude that it could be the political background in this story on the background of another exacerbation of relations. Because Poroshenko makes a statement that even though Ukraine lost $ 15 billion because of the gap of trade with Russia, but it’s good, but it gets rid of the dependence on Russia and I will heal wonderful life”, – says CEO of the national energy security Fund Konstantin Simonov.

The more that Russia can afford to stop supplying diesel fuel to its neighbor. “I think we believe that the oil market in Ukraine in any case we lose, so fight for it, unlike the gas market, it makes no sense. For gas, Ukraine is trying to replace Russian gas with reverse, but it’s clear that this is the same Russian gas. The fuel situation is different. The topic of oil supplies less politicized. A replacement for the Russian diesel fuel Ukraine will find increasing supplies from Belarus, Poland and Lithuania,” – says Simonov.

“In addition, we have started to squeeze out of the Ukrainian oil refineries under the previous government, and now it’s even more blooms. Because oil refining in Ukraine was under the control of our companies” – the expert adds.

The major problems with Russia on this market in Ukraine can not create, however temporary difficulties for Ukrainian consumers of diesel fuel completely. And its main customers are farmers and military equipment.

Thus, Ukraine will face a temporary shortage of diesel fuel, plus she would have to buy more expensive imported fuel. “The economy is simple: all the same Europe takes our oil, refines it and sells. Of course, it is better to take from Russia or Belarusians, as the shoulder of the transport is less and consequently lower prices”, – said Simonov.

“The Russian diesel fuel was the cheapest, so this will be an additional burden on already strained national budget. Especially that the Belarusian company can use this opportunity to raise prices”, – says Roman Tkachuk from Alpari. “Relations between Russia and Ukraine are developing in the sinusoid. Traditionally, in the fall they worsen. Perhaps it will be so this year. In this case, we again hear about the “gas wars” and other geo-economic tensions,” he adds.


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