GazpromNeft NIS Pancevo refinery modernization will influence positively the Serbian petrol retail market

, News Serbia Energy

Fuel in Serbia could be cheaper by 2.5 to3 dinars per liter in 2013, due to the opening of a modernized refinery in Pancevo and reductions in transportation costs and other costs of fuel import, it was announced in december 2012 from the Association of Petroleum Industry of Serbia (UNKS).

If the Oil Industry of Serbia manages to provide the required amount of oil products for the Serbian market, and if NIS gives wholesale prices that are competitive in comparison to the neighboring refineries, retail fuel price due to reduced import costs may be cheaper for up to three dinars per liter, it was specified at the press conference by the board member of UNKS Aleksandar Mileusnić.

For the fuel to be cheaper it is necessary that the exchange rate of dinar against the euro and the dollar remains roughly at the current level, and that there would not be a significant increase in oil prices in the world market, Mileusnić added.

While responding to the question whether there is room for further reduction in fuel prices by lowering the trade margins on petroleum products, Mileusnic said that these margins are not so large and that they do not allow extra profits to oil companies operating in Serbia.

We do not see a possibility to lower the margins because oil companies are already working at the minimum of cost effectiveness and they need to cover the cost of fuel procurement, logistics, investment and business in Serbia, emphasized the representatives of UNKS.

Margins of “oil companies” in Serbia, are not the biggest in the region, for example, for the most profitable euro diesel the net margin is between 5 and 10 dinars per liter, it was pointed out at the UNKS conference, which gathers the companies Eco Srbija, OMV , Intermol, Lukoil Serbia, Petrobart avia, Transnafta, Ina, Speed, and others.

Only if sales continue to fall in the market, since it declined for about 10 percent in the first six months, and 15 percent in November and December therefore reducing the possibility of lowering the trade margins, said the representatives of UNKS and stressed that although there is a limit below which the oil companies can not go, since it would result in the closure of some stations, which happened this year too.

Only healthy competition could lead to lower fuel prices since margins are defined by the market competition and transparent business environment, which does not fully exist in Serbia, said the Board Member of UNKS Vojkan Janićijević.

He added that vague and undefined conditions are not rare in the oil market in Serbia, as well as sudden changes in the rules, as is the case with the adoption of a new regulation on the technical and other requirements for liquid fuels of petroleum origin.

Janićijević therefore suggested that clear and transparent framework are most important for the business of oil companies operating in Serbia and urged the ministry to involve  the representatives of the Association in discussions when making important decisions related to the market of petroleum products in Serbia. Companies that are members of UNKS, some of which have refineries in neighboring countries, can offer more competitive rates than NIS, which should lead to a decrease in fuel prices in Serbia, said Chairman of the Board of UNKS, Bozidar Rajic.

He added that some of the members of the Association imported products from the region for NIS, before the modernization of refineries in Pancevo was completed.

Source Serbia Energy Magazine