Consumption of fuel exceeds supply, indicating there is a large share of counterfeit fuel and smuggling on the market, Director of A-95 consulting group, Serhiy Kuyun, said at the LPG Ukraine 2012 conference in Kyiv.

"We consumed 20% more [fuel] that we imported. The reason is obvious – there is smuggling and counterfeit fuel," he said.

Kuyun said that petrol consumption in January-September 2012 came to 3.16 million tonnes (the supply is 2.59 million tonnes or minus 18%), diesel fuel consumption stood at 4.39 million tonnes (the supply is 4.19 million tonnes of minus 5%). Thus, the problem of counterfeit fuel and smuggling is mainly seen in the petrol segment.

"We've conducted a large-scale investigation with AutoVisio into the quality of fuel at filling stations. According to the results – only 20% of fuel is in line with Ukrainian standards," he said, adding that anti-records were seen – 4,000 ppm sulphur and 54% benzol.

The research was conducted in non-brand filling stations in Kyiv, Donetsk and Kharkiv regions and in Crimea. The share of counterfeit fuel at the checked filling stations came to over 70%. The worst indicators were registered in Cirmea and Kyiv region (90% of counterfeit fuel).

Kuyun said that in 2012 consumption of fuel, taking into account liquefied gas, will expand by 1.7% compared to 2011, to 11.03 million tonnes.

He said that apart from counterfeit fuel, the key problems of the market are the development retardation of fuel refining and a threat of the introduction of duties on imported fuel, which will result in the increase in the price of fuel.

He also said that the obligatory adding of bioethanol to petrol could complicate the operation of the market.

"Risks of monopolization of the market by sellers and large opportunities in abuse of law in administration of operations on adding bioethanol appear," Kuyun said.

President of the Fuel Traders Association Leonid Kosianchuk confirmed the problem of smuggling for the Ukrainian market.

"It's really that a smuggling problem exists in Ukraine. Maybe it is 20% and even more. I want to add that this exists that it's obviously beneficial to officials," he said.