Unit 27 Petroleum Products

Markets of petroleum products can be classified on the basis of different signs. Proceeding from the types of petroleum products, one can distinguish among light distillated (special and motor gasoline, including high and low octane number gasoline and aviation gasoline), medium distillates (kerosene and jet fuel), heavy distillates (diesel fuel, heavy and lubricating oils).

Proceeding form the fact that enterprises of the whole cycle, starting from extraction and import or raw petroleum and gas condensate, transportation and primary processing, production and import of petroleum products, their storage and concluding with wholesale and retail trade in petroleum products, one can consider each stage to be a separate element in the structure of the market of petroleum products.

If one takes into account the fact that services in the sphere of retail trade in petroleum products are rendered in the places where gasoline stations are located and where population lives, that market is considered to be regional and the rest of the markets are considered to be national.

The present structure of the branch of petroleum product supply has formed as a result of an active demonopolization which had been carried out by the following two ways:

split-up of monopoly formations, first of all split-up of regional enterprises of petroleum product supply, by means of separation of petroleum bases, gasoline stations and their further privatization as independent units;

entry of new economic entities into different segments of petroleum product markets, predominantly into segments of wholesale supply and retail trade.

Transportation of petroleum to the refineries is partially diversified due to the use of the capacities of the petroleum trans-shipping terminal in the city of Odesa and the main petroleum pipelines comprised by the State Enterprise “Prydniprovski Magistralni Naftoprovody” and the main petroleum pipeline “Druzhba” which are subjects of natural monopolies. The final solution of the diversification could be reached by means of construction of a sea petroleum trans-shipping complex (terminal) in the port Yuzhny in the Odesa region, but owing to the force of different circumstances the construction of the complex and putting it into operation are delayed.

If one takes into account the above information, it is possible to state that the market of petroleum and petroleum products, on the whole, is built in accordance with the classical scheme which provides for separated activities of subjects of natural monopolies and competition on the adjoining markets. To complete the scheme, it is necessary to arrange the matter concerning the establishment of an independent regulatory body with a view to insuring both efficient regulation of activities of subjects of natural monopolies and equal access for all subjects of the adjoining markets to services rendered by the subjects of natural monopolies.

Ex. 1. Read and translate the text.