OREANDA-NEWS. October 27, 2009. Director of the Foreign Economic Activity Department of the Russian Economics Ministry, Aleksey Likhachev said that the government will be providing export duty holidays for 13 oil fields in Eastern Siberia on a monthly basis starting from December 2009, reported the press-centre of OTKRITIE Financial Corporation.

According to Mr Likhachev, the government will assign a specific code to crude oil produced at the 13 Eastern Siberian greenfields, which the government earlier slated for the export duty exemption. The government will continue issuing its monthly decrees on export duties, but going forward it will be setting a zero duty rate to the crude oil with the specific (Eastern Siberian) code. The list of oil fields eligible for the export duty exemption includes large Vankorskoye (Rosneft), Yurubcheno-Takhomskoye (Rosneft), Verkhnechonskskoye (TNK-BP and Rosneft), and Talakanskoye (Surgutneftegaz) oil fields.

View: Effectively, it means that the government has left a question on the duration of the export duty exemption unanswered at this point. We believe it may return to discussion on the specific exemption terms (duration, threshold production levels) next year. For now, we can safely assume that the export duty holidays will cover at least 2010.

Although the introduction of the duty exemption for Eastern Siberian fields was generally expected, the new should be positive for the effected companies, in our view. It is especially positive for Rosneft, which expects to ramp up production at its Vankorskoye field next year, and oil exports from Vankor will be free from export duties. Rosneft expects to increase crude production at the Vankor field by at least 7 million tonnes. On our estimates, the duty exemption should translate into tax savings of at least \\\\$1.4bn next year, assuming the current price of oil.