Oil Export Duty of US192,1 Makes Development of Projects Impossible
OREANDA-NEWS. December 01, 2008. The oil export duty of US192.1 per ton enforced on December 1 makes development of major projects by companies impossible, Viktor Vekselberg, Executive Director, Gas Business Development, TNK-BP, said to journalists, reported the press-centre of TNK-BP.
“The export duty of US 192 allows only survival of companies but not development of large-scale projects,” said he.
Mr. Vekselberg did not specify an optimal size of oil export duties that would make the business of oil companies profitable and allow development of major projects.
“I cannot say that, because everything depends on oil prices,” noted he and added that in case of further decline of oil prices duties should also be reduced.
As already reported earlier, on November 26, Vladimir Putin, Chairman of the Russian Federation Government, signed a resolution on new rates of duties for export of oil and oil products in the Russian Federation that will come into force on December 1.
According to this resolution, the export duty, beginning from December 1, will amount to US 192.1 per ton of oil, US 141.8 per ton of light oil products, and US 76.4 per ton of dark oil products.
The current export duties enforced on November 1 are US 287.3, US 205.9, and US 110.9, respectively.
The new export duties are calculated based on the average price of Russian oil monitored from October 15 through November 14, which turned out to be equal to US 59.3519 per barrel.
A source close to the Government informed the Interfax Financial Information Agency (Interfax-AFI) that the Government held a meeting on November 26 dedicated to establishment of export duties. According to this source, Sergey Shmatko, Minister of Energy of the Russian Federation, proposed to reduce the oil export duty, beginning from December 1, to US 140 per ton. However, his proposal was not supported.
Alexander Sakovich, Deputy Head of the Customs Payments Department, Ministry of Finance of the Russian Federation, said to Interfax-AFI that, due to the significant fall of oil prices in November, oil companies addressed the Government with a request to set export duties lower than previously intended. According to him, the average oil price was US 51.6 per barrel at the start of November and US48.6 per barrel beginning from November 10.
The President of the Russian Federation is expected to sign the law “On Customs Tariffs” soon, which will shorten the period of oil price monitoring and the period of validity of export duty rates for oil and other commodities made of oil. The law was approved by the Federation Council on November 26.
In particular, the oil price monitoring period is shortened from two months to one month, starting from the 15th day of each month through the 14th day of the next month, beginning from October 15, 2008.
The period of validity of export duty rates is also shortened from two month to one month with new rates introduced on the 1st day of each month following the monitoring period.
The resolution implies that decisions of the Russian Federation Government on changing the rates of export duties must be published at least one day before their enforcement.
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