OREANDA-NEWS. March 04, 2010. Federal Anti-Monopoly Service Head Igor Artemyev was quoted yesterday by Bloomberg as saying that if the government approves the export netback parity pricing mechanism proposed by FAS, domestic refined product prices could fall by as much as 15%, reported the press-centre of OTKRITIE Financial Corporation.

View: We estimate that at present domestic petroleum product prices are indeed 10-15% higher than theoretical export netbacks. Earnings of integrated Russian oil companies could see a 7-12% downside risk if the government introduces domestic refined product price caps.

While there is no certainty that export parity-based price caps will be adopted any time soon, we believe the near-term news flow regarding regulatory and tax matters for integrated Russian oils (eg. export duties for Eastern Siberia, tighter refinery gate price controls) is likely to be negative. This only strengthens our view that the near-term outlook for Russian gas stocks is better than the outlook for oils.