Gazpromneft sees slow European diesel demand recovery

European diesel demand is unlikely to recover to pre-pandemic levels any time soon, according to Gazpromneft Export's head of strategic planning and business development Alexei Kornienkov.

Speaking this week's Argus Oil Products Market 2020 online conference, Kornienkov said demand in Europe, which is a key market for Russian diesel, contracted by 7pc because of the lockdowns this spring, more than in the financial crisis of 2008-09. It took demand eight years to recover fully from that, he said. In Germany alone, demand is down by 17pc this year, well above the 6pc decline in 2008 from which it never fully recovered, he said.

Any demand recovery in Europe will be hampered by a growing focus on a low-carbon agenda, the maturity of renewable fuels, the availability of alternative power plants and on the consequences of the 'dieselgate' scandal of 2015 in which German car maker Volkswagen cheated emission tests, according to the Gazpromneft Export presentation.

Around 80pc of diesel consumed in Europe is produced internally, with the rest imported. Russia is the largest external source. Kornienkov said that in the longer term the share of Russian diesel imports to the European market will fall, form its level of 11pc currently to 9pc by 2035.

By Oksana Yablokova