Month: March 2020

In February 2020, the position of the largest importer of diesel fuel was regained by Wexler Group, placing 47.5 thousand tons on the market. This was reported to enkorr by the A-95 Consulting Group, citing data from its own research.

Approximately half of this volume – 24.5 thousand tons – Wexler delivered via the PrikarpatZapadtrans pipeline, of which about 7 thousand tons are the resource of the Mozyr oil refinery. The remaining 23 thousand tons arrived by rail from the pipeline terminal in Gomel (Belarus).

OKKO ranks second in the February rating with 44.2 thousand tons. More than half – about 23 thousand tons – of the volume of imports accounted for the resource of Belarusian refineries. OKCO did not import through the pipeline in February, and the remaining 21 thousand tons were delivered in approximately equal proportions from the Mazeikiai Refinery (Lithuania) and from the terminal in Gomel.

The third ranking position, as in January, is occupied by the Grand Prix Oil company, which operates with fuel from the Lukoil refinery. Last month, the trader delivered to Ukraine more than 39 thousand tons of diesel fuel, which is almost 50% more than the supply in January.

№	Company	Feb 20	2 months 2020
1.	Wexler	47,5	73,7
2.	OKKO	44,2	76,2
3.	Grand Pri Oil	38,8	65,3
4.	WOG	27,4	56,6
5.	Glusco	24,3	41,8
6.	UPG	22,5	38,5
7.	Alliance Energo Trade	17,5	32,3
8.	Unimex	17,4	30,5
9.	Alliance Oil Ukraine	17,0	31,7
10.	BRSM-Nafta	11,0	22,1
	Other	116,1	211,8
	Total	383,6	680,5

Closes the first five “Glusko-Ukraine.” In January, the company operated primarily with the Gomel resource, remaining one of the largest importers on this supply channel. The company also imported part of the fuel through PrikarpatZapadtrans from Belarus and Lithuania. The fourth line of the ranking was taken by WOG. Over 60% of the February deliveries of diesel fuel by the company are accounted for by the Lithuanian resource. For the second month, WOG is the leader in terms of import of diesel fuel produced by the Mazeikiai Refinery. In addition to the Lithuanian diesel fuel, the company imported 8.5 thousand tons of Belarusian fuel and 2 thousand tons through sea ports.

In February, the largest importer of diesel fuel by sea remains the wholesale trader Alliance Energy Trade, supplying about 8 thousand tons to the market. The second and third lines are occupied by Fidea Firm and Orange Oil with volumes of 8 and 5 thousand tons, respectively.

As enkorr reported, the balance of the diesel market in February 2020 amounted to 448.4 thousand tons. Ukrainian refineries produced an estimated 64 thousand tons, imports – 384 thousand tons.

The new week began with a more than 25 percent collapse in oil prices – the largest drop in 29 years. The trigger for the price collapse was the announcement by Saudi Arabia of new official selling prices (OSP), which, in fact, was the beginning of a new price war in the oil market, hit by the undeclared pandemic of the coronavirus COVID-19.

Saudi Arabia lowered its OSP and announced plans to increase oil production next month after Russia refused the additional reduction in oil production proposed by OPEC to stabilize oil markets.

Futures for Brent crude fell by 26%, to $ 33.46 per barrel. to 06:50 GMT (08:50 Kiev) after it had previously fallen to $ 31.02 / bbl. – the lowest level since February 12, 2016. Brent oil futures rushed to the largest daily decline since January 17, 1991, when prices collapsed at the beginning of the first Gulf War.

American oil brand West Texas Intermediate (WTI) fell by $ 11.48 or 28%, to 29.80 per barrel. after it reached the level of $ 27.34 / bbl, also the lowest level since February 12, 2016, the American oil standard could potentially reach the largest daily drop in history, exceeding 33%.

“The period of such low prices should be limited to several months, unless the virus crisis affects the world market and [falling] consumer confidence does not cause a new recession,” said Keith Barnett, senior vice president of strategic analysis at ARM Energy, Houston.

The actual disintegration of a group called OPEC +, consisting of cartel member countries and other producers, including Russia, completes more than 3 years of cooperation between residents and non-residents of OPEC in the field of market support.

Saudi Arabia plans to increase production of “black gold” to 10 million barrels per day. (b / s) in April after the expiration of the current agreement to limit oil production expires on March 31, two industry sources told Reuters on Sunday.

The world’s largest oil exporter seeks to punish Russia, the second largest producer in the world, for refusing to support additional production cuts proposed at the OPEC ministerial summit on March 5.

The last price war, in which Saudi Arabia, Russia and other major oil producers were involved, took place between 2014 and 2016. Its main goal was to oust American shale oil from the market, the production of which doubled in the past decade.

“[At the moment] the forecast for the oil market is even more deplorable than in November 2014, when such a price war started for the last time, since [today] we are talking about a significant drop in oil demand due to coronavirus,” they said at Goldman Sachs.

Last weekend, Saudi Arabia reduced the OSP for all grades of oil in all directions [of export] by $ 6–8 / bbl.

Viral crisis

Meanwhile, China’s efforts to contain the outbreak have had an extremely negative impact on the world’s second largest economy, leading to a drop in oil supplies to its largest importer. And the spread of the virus to other large countries, such as Italy and South Korea, and the growing number of cases in the United States, heightened fears that oil demand would collapse this year.

Goldman Sachs and other large banks, such as Morgan Stanley, have lowered their forecasts for demand growth, as Morgan Stanley predicts that in 2020 China will show zero growth in demand for raw materials. Goldman expects a reduction in global demand by 150 thousand bpd. In addition, Goldman Sachs reduced its Brent crude oil price forecast for Q2 and Q3 2020 to $ 30 / bbl.

A source: enkorr

Ministry of Finance against the abolition of the obligation for agricultural and industrial enterprises to obtain licenses for the storage of fuel in tanks with a capacity up to 70 tons. The position of the Ministry of Finance is stated in the answer for the request of the deputy of the Rada Alexander Gerega for the signature of Acting Minister. Minister Yuriy Geletiya since February 27.

“Exemption from licensing of fuel storage activities for certain entities or types of economic activity will lead to the impossibility of exercising complete control over the fuel turnover and will create conditions for the use by unscrupulous entities of the management of unaccounted fuel, from which taxes have not been paid,” – said in the answer. Minister, published on the website of the Verkhovna Rada.

The Acting Finance Minister added that according to the latest amendments to the Tax Code (adopted by the Council on 18.12.2019), the procedure for obtaining licenses for the storage of fuel used by industrial or agricultural enterprises solely for their own needs has been simplified. Yes, they can only apply for a license without a package of supporting documents.

The statement must state the purpose of the fuel, the capacity of the tanks and their actual location.

The Finance Ministry also recalled that until March 31, 2020, there was a delay in fines for storage of fuel without a license.

As of March 2, 2020, according to the State Tax Service, 4 268 licenses for fuel storage were issued to 2 934 entities. In January-March 2020 alone, the Tax Service issued 1,374 storage licenses and their beneficiaries were mainly farms.

According to enkorr, in January the co-owner of one of the agrarian companies, MP Alexander Gerega asked the government to work out an option to cancel licenses for enterprises storing fuel for their own needs in tanks with a capacity up to 70 tons.

Recall that from July 1, 2019, mandatory licensing of fuel operations was introduced, as well as tightening of control over its turnover with the introduction of the new SEART.

From the very beginning, agricultural and transportation companies tried to delay or abolish this reform, citing the inability to obtain storage licenses in a timely manner. The deferral was first granted until 31 December 2019, then until 31 March 2020.

Source: enkorr

The companies Anvitrade (Wexler Group) and Alliance Energy Trade offered the lowest prices at two tenders of JSC Ukrzaliznytsia for the supply of 20 thousand tons of diesel fuel under formula contracts. This is evidenced by the results of two of the five tenders in the ProZorro system.

Anvitrade won in one tender with an estimated price of 20,600 UAH / t, Alliance Energy Trade in the second procedure – with a price of 20,999.99 UAH / t.

Formula pricing stipulates that the estimated price of DT at European quotes 10 days before the auction and at the rate on the date of the auction is subtracted from the price proposed by the winners of the auctions. Thus, the so-called “fixed margin” of the supplier is determined. This is not a trader’s net earnings, but a premium to the level of European quotes. According to enkorr estimates, it will be 825.5 UAH / t or $ 33.6 / t at the current rate for Anvitrade, and 1158.8 UAH / t or $ 47.1 / t at the current rate for Alliance Energy Trade.

In the future, this “fixed margin” is added to the estimated price for quotations 10 days before receiving the order for the shipment of fuel.

In other words, the prices offered by suppliers are 20 999.99 UAH / t and 20 600 UAH / t – these are prices at which companies are conditionally ready to deliver fuel on the auction day, March 2. For comparison: according to the A-95 Consulting Group, the average market price of diesel fuel on March 2 is 22,030 UAH / t.

In addition to the winners, OKKO, Ukrtatnafta, Sokar Ukraine, Torum, and Southern Fuel Expedition Company (UTEK) participated in the auctions.

Results of auctions of ultrasound on tenders for 20 thousand tons of diesel fuel:

The remaining three auctions will be held March 3.

As enkorr reported, in 2019, Ukrzaliznytsia contracted 343 thousand tons of diesel fuel. Of these, 290 thousand tons were purchased under new contracts and 53 thousand tons – as part of the extension of the old contracts.

The largest supplier, taking into account the prolonged contracts of the previous year, was Trade Commodity – 93 thousand tons. Wexler Group delivered 87 thousand tons, Galnaftogaz – 82 thousand tons. Three new suppliers appeared at the UZ at once – Privat Group with 40 thousand tons, Glusko Ukraine (20 thousand tons) and Alliance Energy Trade (10 thousand tons). In 2019, Sokar Ukraine was unable to win a single tender and dropped out of the pool of suppliers of diesel fuel for Ukrzaliznytsia.

A source: enkorr