Fuel demand from Russia’s agricultural sector higher than expected

Lukoil, the Russian oil major, is experiencing higher than expected demand for petroleum products from the agricultural sector. Petroleum product prices for the agricultural sector are partially subsidized and below market rates. Russia’s Agricultural Ministry said that the reason for higher demand from the sector is due to the tripling of the planted area, which boosted demand for fuel.  To make up for the potential supply shortfall arising from this extra demand, the company lowered oil product sales to independent filling stations, while it adjusts production to deal with the problem. Lukoil committed to supplying 250,000 tons of diesel fuel and 60,000 tons of low-octane gasoline to agricultural producers in 23 regions from March to November. Price basis was November 1 less 30% discount or approximately 6,000-8,000 rubles (US$215-286) less per ton than factory gate prices.  (May 27, 2011)