Effects of Russia-Ukraine war |12 March 2022

Mrs Romain (Photo: Louis Toussaint)

Oil price hikes cause

major local concerns

• Seypec closely monitoring prices on the international market

By Roland Duval

Since the beginning of the Russian invasion of Ukraine, the oil prices have risen on all markets around the world with the barrel moving from less than US $90 in January to US $130 earlier this week, representing an increase of 44 percent.

This major increase has also influenced the prices of refined products such as motor gasoline, gasoil (diesel) and fuel oil – all of which are imported and used in Seychelles.

This unpredictable geo-political situation in Ukraine is therefore massively influencing the oil supply chain causing a major disruption for all importing countries.

Russia being the second producer of oil in the world is now seeing its exports drastically reduced due to logistical implications, while the Organisation of the Petroleum Exporting Countries (Opec) countries are still tightening outflows of their production, aggravating the situation by a constant increasing demand with reduced supply.

Acting chief executive of the Seychelles Petroleum Company (Seypec), Sarah Romain, has said in view of that situation, the company is closely monitoring the situation of fuel prices on the international market and is very concerned about the surge in the rates which would have a direct and indirect immediate impact on prices in the country.

She explained that for the present local situation, Seypec has a secured stock of fuel products which were purchased on lower prices in February and which will satisfy the needs of the country for the coming four to five weeks.

It is however anticipated that prices will most likely rise in April due to expected higher costs of products to be purchased at the end of March.

Mrs Romain noted that while all local charges, inclusive of taxes and margin, are remaining constant, Seypec will have no alternative than to re-adjust its prices according to the world market rates, and that even though the country is currently benefitting from a stable rate of exchange of the US Dollars, any eventual fluctuation will also have direct implications on local prices.

She said Seypec has assessed the present situation and anticipates possible scenarios in regards to the evolution of prices on the international market in the coming weeks.

On behalf of Seypec, Mrs Romain reassured customers that it has sufficient stock of all energy products in the country to meet the national needs and ensures its mandate for a seamless supply of these products at best available prices on the international market.

She explained that being an importing country, Seychelles has no control whatsoever on the determination of international prices and freight costs, and therefore constantly remains at the mercy of these parameters.

It is to note that since March 7, 2022 the price of fuel at the pumps has been R22.12 and according to Mrs Romain, the rise in prices started in April last year, following economic recovery and growth around the world after the collapse due to the Covid-19 pandemic.

She said Seypec is continuously keeping abreast of developments on the world market and makes a key priority to lessen the increases as far as possible.

Regarding the tankers in the Seypec fleet, Mrs Romain explained that they are doing really well, since they are on the upside of the equation in the Russia-Ukraine crisis, with a significant rise in tanker rates, especially in Russian ports and Baltic Sea where they operate.

She noted that based on the size of the tankers, it is not feasible for them to bring our fuel which is now being shipped by Seypec’s suppliers on a regular basis.