“Forbidden” Oil of the Russian Federation: Create Your Own Shipping Ecosystem, Your Own Pricing Agencies, Statistics and Benchmark
We need to demonstrate that our oil is different, at different prices, and not to be manipulated by others.
What can the state do systematically and for the future in the face of external restrictions on the export of Russian oil? The answer to this question is given by the Deputy General Director of the Institute of National Energy Alexander FROLOV in the article “Russia must abandon the “ostrich policy”” published by Infotek. The news agency “Devon” gives the main theses.
To solve the problem in the future, a deeper and more systematic approach is needed. Measures can be divided into two broad classes.
The first is strategic, which includes the creation of the Russian shipping ecosystem. Such a system should include the entire range of services provided – from insurance and transportation financing to the construction of tankers for the transportation of oil and oil products using 100% Russian components.
The second group includes tactical measures. First of all, it would be nice if dollars (in terms of determining the amount of taxes) and data from Argus and Platts agencies, which we collect to calculate the average prices of Russian oil (and they, in turn, affect on taxes).
Relying on the data provided by Western price agencies is absurd in the current circumstances. That is, our state needs its own agencies, its own statistics, which will become the basis for determining the amount of taxes collected from oil and gas companies.
We have specialists who can do it. We need to abandon the policy of an ostrich hiding its head in the sand while someone else publishes Russian statistics. We ourselves need to collect and publish statistics on the various ports from which oil is shipped, as well as on the grades of this raw material, so that it becomes impossible for Western partners to engage in manipulations. And now, for example, Argus and Bloomberg are engaged in them.
The manipulation looks like this: one port is taken, from which one grade of oil is sent. Of course, this variety is important and has a more than prominent position in the market, but still it is one of many. And based on information about one purchase made in one port on one specific day, a conclusion is made about the state of all prices for our oil.
This creates an unfavorable impression among buyers of Russian “black gold”. They start to think that all our oil is really worth that much. We need to demonstrate that our oil is different, sold at different prices, from different ports.
Even Bloomberg is forced to admit that those varieties that were originally sold to the East are now sold at a significantly lower discount, usually not exceeding $10 per barrel. In the current circumstances, Russia is extremely beneficial.
Creating your own Russian indices, publishing statistics – this is what you can do right now.
In addition, in the future, it is necessary to create our own reference varieties – Russia is too big a player to ignore the need to form its own benchmark. As far as we know, the state has such plans.
Theoretically, you can create your own benchmark already this year. And the strategic measures will be sufficiently implemented by the end of the current decade if they are started now.
By the way, in the short term the situation with world prices may change in favor of Russia. The fact is that covid restrictions are being lifted in China, which leads to an increase in demand for oil. And whether supply will keep pace with growing demand (given that the United States is no longer bringing additional volumes of oil to the market, as it was in 2021 and 2022) is a big question.
Thus, world oil prices, including Russian, may rise significantly by the end of the first quarter. In this case, the severity of the problem of filling the Russian budget will decrease sharply, the author of the article concludes.
Comment of IA “Devon”:
To the last thesis, we add that the relevance of the above-mentioned systemic transformations will again be removed.
Earlier it was reported that Russia would not be able to completely reformat the logistics of supplies, insurance issues and completely replace European markets with alternative ones in the near future. When concluding agreements with countries that have not joined the price ceiling, Russia will have to sell oil at a discount below this level. The costs of logistics and insurance services for Russian oil cargo will increase.
Russia will be forced to recreate the Soviet system of maritime oil and container transportation. A new system of trade in “black gold”, its transportation and insurance will be built. The parties will move away from settlements on the London Commodity Exchange, where 90% of shipping insurance was concentrated.
Another important point is the launch of the Russian tanker insurance mechanism. Russian national