Formula of price for Russian oil, which provided a benchmark for pricing in the domestic market were negative.
It is reported by RBC with reference to the Argus. Quote Argus fip (Free in pipe means that the seller is obliged to deliver at his own expense the product to the pipeline) Western Siberia on Monday, March 30, was equal to minus 1 007 RUB. per ton, and on Tuesday — minus 1 200 RUB. per ton.
According to Argus, providers worry that a prolonged period of low prices will contribute to zero or even negative profitability of oil sales in Russia, specifies Agency.
Quote Argus fip Western Siberia is calculated as netback (export price minus transportation costs and export duties and some other charges) average cost of Urals for delivery terms cif (Cost, Insurance and Freight in the final price included the freight costs to the port of destination and insurance of the cargo assumed by the seller) in Rotterdam and the Italian port Augusta including delivery from Nizhnevartovsk, explains the Vice-President Argus Victor Doubles. This quote tied to the prices for the majority of Russian oil, he adds. Nizhnevartovsk is located in Khanty-Mansi Autonomous area, this region produces almost half of all Russian oil.
A negative value Argus fip Western Siberia means that in the last two days, the cost of shipping oil from Western Siberia and the export duty exceeded the price at which the Urals can be sold in Northwest Europe and the Mediterranean, he points out.
Prices on oil supply contracts in the domestic market are based on the value of the formula within one month of delivery, says Pair. At the end of March the quotation of the Russian oil remained in “positive territory”, though, and fell about 12 500 rubles per ton relative to the February level, data from Argus.
Exports will become unprofitable if the current situation will persist for months, explains the Vice-President of the Argus. According to his calculations, Russian companies go to zero, exporting oil when the price of Urals of $15-16 per barrel (CIF Rotterdam) at the current exchange rate and freight rates. It became known yesterday that on March 30 the price of Urals has fallen to $13 per barrel. At this price of zero export duties on oil and dramatically reduced the severance tax.
Russia’s oil sold at a differential to the netback, as a rule, c premium. Trades for April over March 26, the average price of 7-8 thousand rubles per ton, said a Pair.