OREANDA-NEWS. September 17, 2010. Vedomosti reported that Deputy PM Sechin met with PM Putin and asked to extend the export duty relief for the Vankorskoye field of Rosneft until the end of 2013. Rosneft currently pays a reduced export duty (approximately 30% of regular) on crude exported from the Vankor field, but according to the latest government plan the company was supposed to begin paying regular export duties from January 2011. In addition, Sechin asked PM Putin to provide similar relief for Yurubcheno-Tokhomskoye - Rosneft's large undeveloped field located in Eastern Siberia, reported the press-centre of OTKRITIE Financial Corporation.

View: Sechin’s proposal comes on the back of this week’s promise by PM Putin to LUKOIL about preferential tax treatment of future exports from the company’s Caspian projects (fields named after Korchagin and Filanovsky). If upheld, the measure should result in substantial tax savings for Rosneft. Assuming a USD75/bbl Urals price, we estimate this measure would yield tax savings of USD 2.9bn in 2011, USD 3.5bn in 2012, and approximately USD 4.1bn in 2013. If supported by the Prime Minister, the move would be positive for Rosneft.

Valuation and Action: Rosneft currently trades on a 2010E EV/EBITDA of 4.0x and a 2010E P/E of 6.0x. We expect positive reaction in the stock on this news, and reaffirm our our BUY rating and positive view on the stock.