Prices for Gasoline Will Rise in 2006 – Lukoil President

MOSCOW. Dec 28 (Interfax) – Retail prices for gasoline, frozen by oil companies in September 2005, will continue to rise in Russia in 2006, Lukoil President Vagit Alekperov said in an interview with the Argumenty i Fakty newspaper.

“Everyone sees now that we made a mistake by tying the price for gasoline in Russia to the world price. In Russia, where oil is extracted and refined, the market must not be tied to world prices, or else the entire weight of fluctuations will be borne by citizens,” Alekperov said.

“We froze the price to allow the government to amend the situation by January 1. This hasn’t helped. An 11%-12% rise has been announced already in prices for transport, housing utilities and energy. This will have an impact on gasoline. It will probably not become any more expensive in the first months of 2006, but afterwards it definitely will,” he said.

“But we keep assisting the country in a different way. Lukoil will invest $650 million in oil refining in 2006. God save the market from fuel shortages,” Alekperov added.

Commenting on the opinion that inflation in Russia depends on gasoline prices, he said, “this is no longer so.”

“The pulse of inflation remains under the control of large energy suppliers. And we are their major consumers. The energy sector almost does not depend on oil companies,” the Lukoil president said.

“We have to export fuel oil, while the energy sector itself has been tying itself increasingly to gas. Neither heat nor hot water depends on our supplies. We are a guided party in the country’s economy,” he said.

Earlier reports said that Russia’s leading oil companies pledged not to raise prices for oil products on the domestic market at an autumn meeting chaired by Industry and Energy Minister Viktor Khristenko.

“The heads of Lukoil, TNK-BP, Rosneft, Sibneft, Surgutneftegaz and Tatneft recognized the necessity to stabilize prices without any preliminary terms and without tying their pledge to any decisions of the government,” Industry and Energy Ministry spokesman Stanislav Naumov said then.