OREANDA-NEWS. April 14, 2009. TNK-BP was one of the first oil companies to start trading its oil products at the Saint Petersburg International Commodity Exchange, which was launched last year, reported the press-centre of TNK-BP.

Jonathan Kollek, Vice President of TNK-BP for sales, trading and logistics told on the plans of the company and prospects of trading oil products on this market.

— What is the reason behind the company’s interest to this trading floor and what are the prospects for development of exchange trades of oil and oil products in Russia?

— The reason why we are supporting this exchange is that we think it is transparent and ready to cooperation. TNK-BP started trading at the Saint Petersburg Commodity Exchange on March 27, 2009 and already sold more than 3,000 tons of diesel fuel. The company made this step consciously because exchange trading will help us expand the range of contractors and get real market prices for oil products. We hold that exchange trading must be supported to help it increase its liquidity to the required level, provided that participation in trades is economically expedient. However, this is a long process. We are trying to make our contribution to this process.

— How much of its oil products the company is going to trade at this exchange in 2009?

— The current trading volume is rather small because the exchange is only beginning to work. In future, trading volumes will depend on the prices proposed by buyers. The higher the prices the larger the trading volumes. There is no limit to the throughput capacity of the exchange.

— What kinds of oil products will TNK-BP trade at the exchange?

— We are going to sell diesel fuel and jet fuel. The potential of diesel fuel is higher. There is simply no jet fuel market now. A few buyers, a few sellers, and that is all we have. This segment is now very limited. However, the system of Transneft allows trading of jet fuel, so we can give it a try.

When a liquid spot market exists, the next logical step is development of a futures market of the same products in the same place of the exchange. I think that exchange trades are efficient only when they are concentrated on the same or similar types of goods. There may be only two variables here – price and place of delivery or storage.

— Are you going to sell oil and oil products for export at the Saint Petersburg Commodity Exchange?

— Addition of export to the trading scheme raises new problems: where to deliver, how to deliver, and in what to deliver? Third parties, such as owners of ports and transshipment terminals, come into play. The number of variables grows so much that the goods are no longer homogeneous and their trades lose efficiency.

— What measures could spur development and promotion of full-fledged exchange trading of oil and oil products in Russia?

— The government could promote exchange trading by lifting taxes and excise duties. We have put forward a number of proposals to this effect, because we think that transparent trading instruments, such as exchanges and trading floors, deserve support.

Apart from that, it would be logical to unite all existing exchanges into one highly efficient trading floor. Fragmentation of this business is counterproductive. Exchange trading needs liquidity to function well. Liquidity needs volumes. Owing to the sound foundation laid upon inception of the Saint Petersburg Commodity Exchange, it has the potential needed for turning it into a unified exchange.

— Do you intend to be one of the founders of this exchange and why have you not done this so far?

— We are considering various schemes of participation in the operation of this exchange. Currently, we are selling our oil products via brokers, because we think this is the fastest way to enter exchange trading and avoid a number of technical problems. In future, we may get accreditation as a member of the exchange. As to being one of the founders of the exchange, we will consider it if such an option is offered to us.

— The Saint Petersburg Commodity Exchange signed an agreement recently with Transnefteprodukt on transportation of oil products purchased at the exchange. Will this measure encourage companies to take part in exchange trades?

— The exchange has been founded on the basis of Transnefteprodukt and includes transportation agreements from the very beginning.

— Is it real to start trading Russian oil brands on international trading floors as Vice Prime Minister Igor Sechin recently said in Vienna before the summit of OPEC?

— Attempts like this were made many times, as you know. I think it is just a mater of time.