Termination of supplies from Proton Energy: will Ukraine face a deficit of fuel

Photo:  IADE-Michoko/Pixabay

Photo: IADE-Michoko/Pixabay

The largest supplier of Russian oil products has announced the termination of work. Already from April 1, Proton Energy will stop supplying liquefied gas and diesel fuel to Ukraine. The Swiss trader has already sent out to its counterparties official documents on the termination of contracts.

Among the reasons for this decision, Proton Energy names the actions of the Ukrainian authorities.

"At the beginning of March 2021, the company received information that the Security Service strongly recommends participants in the Ukrainian fuel market not to cooperate with Proton Energy Group SA and refrain from buying oil products from the company. Also last week we witnessed events regarding Glusco chain of petrol stations, owned by Glusco Energy S.A. and a member of the Ukrainian Oil and Gas Association. Earlier, in February 2021, the technological volume of diesel fuel in the pipeline (PrykarpatZakhidtrans) owned by the company, was illegally arrested by the Ukrainian authorities," follows from the letter from Proton Energy.

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The experts are confident that the short-sightedness of the authorities will lead to a deficit of diesel fuel and a feverish rise in prices.

This whole situation has become another confirmation of the authorities' shortsightedness, who calculate the situation only in real time, and not one step or two ahead. Now the sowing campaign is coming, when diesel fuel will be especially in demand. But I have not heard any statements about the creation of a diesel fuel reserve stock in case of a response from the Russian side. I have repeatedly stated that we have a threatening dependence on Russian supplies of diesel fuel and liquefied gas. However, it is necessary to take actions that will not lead to additional problems in the economy and agriculture.

Gennady Ryabtsev

Gennady Ryabtsev

Director of special projects of the Psyche Scientific-Technical Center "Psyche"

It will not be easy to find such a free volume of diesel and liquefied gas on the market, says Leonid Kosyanchuk, CEO of the SunOil petrol station chain. All large wholesale companies are bound by term contracts under which refineries operate. Refineries do not work for the warehouse. The market is very sensitive to even smaller volumes.

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Our chain did not have term contracts with Proton, we are working more with an internal producer (Kremenchuk refinery), but I suspect that we will have problems as well, since the demand for diesel fuel will greatly increase. Everyone will lose from this situation: consumers will start paying more for fuel, and market operators will get problems with fuel supply to their chains.

Gennady Ryabtsev

Gennady Ryabtsev

Director of special projects of the Psyche Scientific-Technical Center "Psyche"

In addition, retaliatory sanctions by Russian companies are not excluded. Fuel supplies from Russia are carried out under special permits issued by the Ministry for Development of Economy, Trade and Agriculture to trading companies. Proton Energy imported oil products from the state-owned company Rosneft.

The current events have a political connotation, it is possible that we should expect a response from the Russian Federation, including from companies not related to Proton Energy, Ryabtsev believes.

An example of this, according to him, is the boycott of Russian oil supplies to the Kremenchuk plant. For more than 10 years, Russian oil has not been supplied to Ukraine, and supplies were stopped not only by Tatneft that has claims because of the Kremenchuk refinery, but also by other companies, the expert adds.

The authorities’ response was not long in coming. On Thursday, the Ministry for Development of Economy, Trade and Agriculture of Ukraine reported on the meetings held with the largest players in the oil products market. It was about the diversification of sources and logistics to ensure the controlled supply of diesel fuel and gas.

The volumes of supplies carried out by Proton Energy will be completely replaced from other alternative sources. All importers and market participants have confirmed that the country has reserves for diesel fuel and the ability to quickly replace suppliers if necessary. There is no risk of fuel deficit. The condition of stocks is sufficient to meet the needs of consumers and to carry out the sowing campaign.

Ihor Petrashko

Ihor Petrashko

Minister of Economic Development, Trade and Agriculture of Ukraine

However, experts do not share this optimism.

The current situation will have an impact on prices in April and it is still not clear what will happen. According to my information, supplies will continue, only the trader will be replaced. If this does not happen, in the second half of April the market of oil products in Ukraine will face serious turbulence.

Sergei Kuyun

Sergei Kuyun

Director at the Consulting group A-95

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