Due to the coronavirus epidemic and the government’s restrictive measures, the demand for motor fuel is falling in Russia, said Energy Minister Alexander Novak on Ekho Moskvy radio. The largest decline was recorded in Moscow – by 20-30%. In other large cities – by 10-15%. The fewer restrictions on the movement of people introduced by local authorities, the less demand for fuel falls, the minister added.
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This is not the peak of the fall, Novak is sure. Referring to the opinion of experts from oil companies, he said that “within the next week or two we will see a decrease in consumption” of “percent to 40%.” However, in Europe, where the coronavirus epidemic began earlier, fuel demand fell even more. Novak cited Belgium as an example, where demand fell by 70%.
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Indeed, traffic jams in Moscow have disappeared. According to the data on the morning of April 2, roads became 86% freer than three weeks ago, Interfax reported citing the press service of the Moscow Transport Department. The number of personal vehicles compared to a year earlier decreased by 64%. Taxi rides and car sharing machines were 63% less.
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“This is an unprecedented drop in demand in modern Russia,” says Pavel Bazhenov, president of the Independent Fuel Union (which includes gas stations that are not part of vertically integrated oil companies). But, according to him, motor fuel sales have almost fallen by half. Over the past two weeks, in Moscow and the Moscow Region, demand for gasoline fell by 45%, for diesel fuel – by 30%, in other regions the decline was up to 50%. Depending on the severity of measures to combat coronavirus, demand may fall by up to 70%, he predicts.
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In 2015–2017 gasoline consumption in Russia fluctuated around 35.2 million tons, in 2018 consumption increased by 1% to 35.6 million tons, and in 2019 fell by 2% to 34.8 million tons, says Bazhenov. Demand for diesel fuel, on the contrary, is growing by more than 5% annually. As a result, consumption increased from 31.1 million tons in 2015 to 38.4 million tons in 2019.
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Demand will begin to recover when restrictions on the movement of people end. Bazhenov believes that this will happen no sooner than three months later. But demand will not return to the pre-crisis level soon: the business is experiencing serious problems, people do not have enough money. Independent gas stations will suffer the most in this situation, however, vertically integrated companies will also be affected by the crisis, Bazhenov is sure: “They have many employees, a complicated management vertical, and in some places are excessive. And they are used to working at high rates. “
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The dynamics of falling demand for fuel depends on how long the self-isolation regime lasts, says Dmitry Marinchenko, an analyst with Fitch rating agency. If the restrictive measures last until July, the demand for fuel in the II quarter may fall by half, he argues. But as soon as the epidemic is over, demand will recover quite quickly. Although independent gas stations may not survive this crisis, while for integrated companies the possible losses from retail sales will not be comparable with the profit from the mining business, believes Marinchenko.
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Representatives of the oil companies Rosneft, Gazprom Neft, Lukoil, Surgutneftegaz and Tatneft did not respond to Vedomosti’s requests.
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