Russia to put 2mn T fuel in reserves

MOSCOW: Russian oil companies will put up to 2 million tonnes of oil products into reserves for future use in market interventions to fight off price rises and fuel shortages, the country's energy minister said on Wednesday.

Several Russian regions suffered a severe fuel deficit in spring largely due to rising exports triggered by domestic prices caps.

Insufficient gasoline refining capacity also contributed to the shortage, a political headache for the government prior to parliamentary elections in December and a presidential poll next spring.

Last week, Prime Minister Vladimir Putin outlined several ways to reform Russia's downstream sector, mentioning the possible creation of emergency fuel reserves that would help to ward off a future deficit and contain prices.

"The real action to accumulate reserves will start in July-August," Sergei Shmatko told a news conference, adding that the reserves would amount to 2 million tonnes.

He said the state would activate the intervention system when prices started to rise excessively or when a region began to witness fuel shortages.

"The Rosneftegaz holding will buy (fuel from companies) Several companies have already signed deals," Shmatko said, referring to the state-owned holding company that owns Russia's top oil producer Rosneft .

The minister also told the news conference that the fuel in reserve would be stored at companies' own refineries or at Transnefteproduct, a subsidiary of oil pipeline monopoly Transneft or at state reserves facilities.

Copyright Reuters, 2011