FAS fines oil majors

The epic struggle of the Federal Antimonopoly Service (FAS) and personally of its chief Igor Artemyev against vertically integrated oil companies that, according to officials, overstate prices of oil products has been won by the antitrust watchdog. At least the current phase of this confrontation is won by Artemyev - his position was supported by a corresponding ruling of the Presidium of the Supreme Arbitration Court. The total fine on Rosneft, Gazprom Neft, LUKOIL and TNK-BP for monopolistically overpricing gasoline and aviation fuel is about $1bn. FAS's attacks on oil firms failed many times - the service imposed fines but they were not confirmed in court. The lack of real material punishment over the past years has made companies feel their impunity. Now there is a chance that the rules of the game and ideas of oil majors about their responsibility will be revised. However, it is clear that the problem of monopolistic pricing of oil products cannot be solved with punitive measures only despite their importance. Serious institutional reforms are required. Firstly, to increase the share of oil products sold at exchanges at least to 15% and higher of the total amount. Secondly, to develop independent refining that mostly oil majors are currently engaged in. In this regard attention should probably be paid to the US experience with its independent oil refineries.

By Stanislav Mitrakhovich, NESF leading expert