Government looks at oil duty overhaul
The Russian government is to reconsider oil export duty once a month. The state wants to protect the industry from the huge fall in world demand and rising costs at home.
As oil prices keep on tumbling, the profits of Russian oil companies fall with them.
From record highs of $147 BBL this summer, global oil prices have dropped more than 50 per cent. That's driven the oil majors to appeal for a revision in the export duty the Russian government levies on every tonne of oil sent abroad. Currently that duty is set once every two months, and Oil and Gas analyst at UniCredit Aton, Pavel Sorokin, says producers are pushing for change
“They've put great hopes on custom duty revision which came on the 1 of November to 270 dollars per tonne, however that seems insufficient at this point because the oil price has continued to stay low, not sufficient to make upstream profitable for the oil companies.”
On Monday, Russian oil tycoons met Prime Minister Putin to plead their case once again, and this time the government has taken heed.
“The existing order of setting oil export duties is designed for a situation of relative stability. Today when oil prices jump up and down, this model needs to be corrected. The Ministry of Economic Development, the Energy Ministry and the Finance Ministry have suggested halving the term of an export duty to one month to make it match the current price as much as possible.”
The next revision of export duty is due on December 1. Its much needed, as crude exports through the country's pipeline system dropped 25 per cent below their normal level at the beginning of November as companies held back oil in the expectation of a cut in the export duty from December.
Amendments to the law on oil export duty are to be introduced later this month.