Transneft Proposes Discarding Price Regulation for Services of Oil Products Transportation by Trunk Pipelines

At the meeting the experts explored the issue of deregulation in the field of oil products transportation by trunk pipelines.

Delivering his speech at the FAS Expert Board, Maksim Grishanin said that Transneft, JSC proposed discarding the price regulation for oil products transportation by trunk oil product pipelines in favor of tariffs monitoring.

The first vice president explained that discarding price regulation in the field was possible due to a bunch of reasons. Thus, in case of domestic supplies Transneft, JSC is not in a dominating position as a transporter, and conditions of its operation fail to meet the criteria for a natural monopoly. In exporting the oil products the Company holds the dominating position as a transporter, but conditions of its operation also fail to qualify it as a natural monopoly.

Maksim Grishanin stressed that cancellation of the price regulation for services of oil products transportation by trunk pipelines would not cause a rise in the transportation costs due to natural market restrictions and tough competition offered by Russian Railways, JSC. So, the oil products transportation market is competitive and can be deregulated without prejudice to the consumers.

He proposed to forward the issue of discarding the price regulation for services of oil products transportation by trunk pipelines and transition to price monitoring to the meeting of the Management Board of FAS Russia.

As Anatoly Golomolzin, Deputy Head of the FAS Russia mentioned when commenting on the proposal by Transneft, JSC, preliminary review indicated availability of prerequisites for deregulation in the field. Crucial were the conditions making it possible, he added.

The action plan was elaborated by results of discussion, including:

- conducting by the FAS of Russia extra comprehensive analysis of services in the market of transporting light oil products;

- setting up a working group to draft specific proposals for examining the issue of declining price regulation for services of oil products transportation by trunk pipelines;

- holding a meeting of the Management Board of the FAS Russia to consider the issue of replacing price regulation for services of oil products transportation by trunk pipelines with price monitoring.