Russia to ban gasoline exports amid shortages

MOSCOW, April 28, 2011 (AFP) - Russia decided to halt exports of gasoline and switch the flow to the home market to fight shortages and a price rise, in a statement on Thursday taking effect in a few days' time in May.

The sudden announcement from the world's biggest oil producer came after Prime Minister Vladimir Putin ordered his government to tackle an issue that has been gaining increasing attention ahead of upcoming elections.

Deputy Energy Ministry Sergei Kudryashov's comments suggested that the export restrictions would apply only for the month of May and then be followed by higher gasoline (petrol) export duties aimed at keeping most future sales within Russia.

"Today we agreed that companies will provide all their volumes for the domestic market," Kudryashov told state television. "There will be no exports."

"I believe that for May, we should cover demand by limiting exports," he added in separate comments carried by Russian news agencies.

A spokesman for the country's biggest oil producer Rosneft later confirmed that the decision only applied to the month of May.

"The halt is only on high octane gasoline, which is in deficit in Russia," the unnamed spokesman told Dow Jones Newswires.

The sudden move came after two dozen Russian regions reported gasoline shortages causing prices at the pump jump by as much as 30 percent since the weekend.

Russia officially exported three million tonnes of gasoline last year but energy companies are reporting higher foreign deliveries in the first quarter because of surging global energy prices.

The Russian domestic market remains tightly regulated and local price increases have already resulted in probes and fines against some of the country's largest producers.

Kudryashov said the government would prefer not to meddle in the domestic market directly and instead gradually raise export duties aimed at encouraging Russian producers to sell at home.

"We rule out the introduction of state regulation," the deputy energy minister said. "There are other levers."

Putin this year accused oil firms of using the North Africa and Middle East crises to "crudely exact maximum gains" and received assurances that special gasoline discount rates would be introduced across the country shortly.

But the head of Russia's largest private oil producer Lukoil said Thursday that he expected prices to rise by five to seven percent in the coming days and the deputy energy minister said he expected an increase along the same lines.

Consumer prices -- particularly those on food -- have been edging up across Russia this year and their steady climb concedes with swelling voter discontent.

A recent public opinion poll showed the ruling party approaching December's parliamentary elections with the lowest approval rating in its history.

The deputy energy minister said the fuel shortage was structural in nature and should be easily solved once the government sits down with major companies to draft a domestic deliveries schedule.

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