OREANDA-NEWS. October 01, 2010. According to Vedomosti, the Russian Ministry of Economic Development has unexpectedly supported the idea of keeping a reduced export duty rate (representing approximately 30% of the regular rate) for Vankor, Rosneft’s largest greenfield — until at least the end of 2011. The government is supposed to make a decision on October 1 over Rosneft's original proposal about maintaining a reduced export duty rate for the Vankor fields in the next three years, reported the press-centre of OTKRITIE Financial Corporation.

View: We believe the Economics Ministry’s position seriously increases Rosneft’s chances of retaining preferential export duty rates at least for the next year. Should the government support this proposal, we estimate Rosneft’s tax saving could amount to USD3bn, in the current oil price environment of USD 75/bbl. This represents approximately 15% of the company’s projected 2011E EBITDA. We believe the stock could strengthen 3%-4% as a result of this news.

Rating and Action: We maintain our positive view on Rosneft and our BUY rating. Given its recent underperformance and its chances of retaining preferential tax treatment (at least for the next year), Rosneft remains one of our top picks in the Russian oil and gas sector.