Conflict of Interest of Two State Monopolies to Disrupt Oil Exports via the ESPO

«Transneft» accused Russian Railways of monopolistic practices due to the introduction of limits on the car documentation . Now the station Gruzovaya has accumulated a large amount of cargo trains with oil, which threatens to ruin of the schedule of tankers shipment in the port of Kozmino.
The Russian Railways, however, believes that the application for the cars simply failed to be issued on time.
As the analyst of the Independent analytical agency «Investkafe» Julia Voitovich explained to the Center for energy expertise , «such a case is not unique.» Supplying raw materials, especially by railway, always involves certain risks, she says. The peculiarity of this case is that there had been a clash of interests between the two state monopolies, «Transneft» and Railways. The fact that the «Transneft» and Railways are monopolies in the market, allows them to dictate the terms of delivery and possess a complete control of the supply tariffs.
In his turn, the senior analyst at FG BCS Igor Krajewski believes that «the problem of congestion of the railway network is now urgent for many shippers, as the current infrastructure can not cope with overgrown rolling stock.» He believes that the «deconsolidation of the carrier market has led to a decrease in the efficiency of rail freight. JSC «Russian Railways» and the Ministry of Transport are yet to solve this problem. As to the transport component in the price of energy sources, they depend on the haul distance. The transport component in the price of oil eastbound is estimated at an average of 15%. »

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