MOSCOW, Dec 25 (Reuters) - Domestic prices of liquefied petroleum gas (LPG) in Russia halved in December from the previous month due to an influx of the fuel, exports of which have been curbed by European sanctions, Reuters calculations showed.
The European Union's sanctions against Russia's LPG took effect on Dec. 20. The restrictions were proposed last year by Poland, one of Russia's largest LPG importers.
LPG, or propane and butane, is mainly used as fuel for cars, heating and to produce other petrochemicals.
A sharp rise of LPG supplies to the domestic market led to a collapse in wholesale prices in Russia to around 14,000 roubles ($140) per metric ton in December from 28,000 roubles at the end of November, according to Reuters calculations based on trading sources and data from a local commodity exchange.
Exports are more lucrative and Russia could earn up to $230 per ton from supplies to Poland.
Still, some types of Russian LPG are eligible for exports, but account for around a fifth of total LPG, which Russia used to export.
Russia has increased LPG exports in recent months to China, Mongolia, Armenia, Georgia and Azerbaijan, according to industry sources. Traders said that Russia's exports to China have potential for further growth.
Russia also exports LPG to Afghanistan, though the market participants say the supplies are constrained by issues with payments.
"We would be ready to supply it there, but our Afghan partners are prepared to pay only in cash. And then what should we do with this 'cash'? Additional questions and problems may arise while bringing it back to the Russian Federation," a trader said.
($1 = 99.7000 roubles)
Reporting by Damir Khalmetov; writing by Vladimir Soldatkin, editing by Emelia Sithole-Matarise
Source: Reuters