OREANDA-NEWS. October 30, 2009. The government is going to build up exchange trade of oil products, to which oil companies show no great interest so far. A meeting was held week dedicated to exchange trade development, which was headed by Vice President Igor Sechin and participated by representatives of Russian oil companies and oil authorities. A source familiar with the results of this meeting said to Vremya Novostei that oil companies are ready to substantially increase the volume of their sales at alternative trading marketplaces if the government manages to attract major customers there.

The meeting was held at TNK-BP, said a source of Vremya Novostei in oil circles. The choice of the meeting venue was not random as TNK-BP was acknowledged by the government as the most active seller of oil products at exchange trade floors. The company is going to sell 15% of its fuel at trading marketplaces.

Vremya Novostei was told that the meeting was participated by Igor Sechin, Vice President of the Russian Federation; Anatoly Golomolzin, Deputy Head of the Federal Antimonopoly Service; Vladimir Milovidov, Head of the Federal Service for Financial Markets; Stanislav Svetlitsky, Deputy Minister of Energy; representatives of Lukoil, Gazprom Neft, Rosneft, TNK-BP, and Surgutneftegaz; and Sergey Maslov, President of the Saint Petersburg Commodity Exchange. In conclusion, Mr. Sechin recommended that the relevant ministries and agencies should “consider increasing the volume of oil products sales at exchange trading marketplaces.”

The idea of establishing a dedicated oil and gas exchange originated in the government in 2006. Two years later, the government decided to open a trading floor in Saint Petersburg and start trading oil products only. The Saint Petersburg commodity exchange was founded by governmental and near-governmental structures – Transneft, Transnefteproduct, Rosneft, Gazprom Neft, Zarubezhneft, and Surgutneftegaz together with Sovkomflot, Russian Railways, Bank for Foreign Trade, Sberbank, and Gazpromnabk. The first exchange deals were conducted at this commodity exchange a year ago.

Oil companies have long been saying that they are ready to build up their sales at the commodity exchange if the number of players in it is adequate, but so far the demand does not match the supply. In early September, TNK-BP proposed three lots of oil products but sold only two of them. Other oil companies are facing similar problems, said the source. “For this reason, participation of governmental structures in exchange trade could considerably enhance the interest to the trading floor,” noted the source of Vremya Novostei. The Vice President ordered to develop a regulatory framework for participation of major customers, such as the Ministry of Defense and Russian Railways, in exchange trade and reduce the excise tax on oil products for attracting oil companies to exchange trading.

Apart from that, Mr. Sechin requested to reach a compromise for the most controversial issue – correct price formula for estimating the market price of oil products. Earlier, the Federal Antimonopoly Service proposed several versions which did not suit oil companies. “A mechanism for formation of objective market prices of oil products based on a number of indicators for the internal market” must be worked out by November 30, said the source and noted than the Ministry of Economic Development and Trade is now involved into development of an optimal price formula.

Oil companies are ready to increase their sales of oil products at commodity exchanges, which was confirmed by Rosneft and Lukoil. Reorientation of sales to trading floors will help oil companies get rig of endless conflicts with the Federal Antimonopoly Service, which claims that oil products are overpriced and imposes multi-billion fines on oil companies. Despite the fact that the claims of the Federal Antimonopoly Service are often declined at the court, the claims still have a negative impact on the image of oil companies. “We are tired of constantly fighting with the Federal Antimonopoly Service. If serious players come to exchange trading floors, we will have good reasons for trading there,” said a representative of one of the oil companies to Vremya Novostei.