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Russian oils: Ministry of Energy suggests strict rules for calculating export duty relief

According to Kommersant, the Ministry of Energy has suggested establishing rules for granting crude oil export duty reliefs. The Ministry proposed setting up specific formulae to calculate the discounted export duty rates. The rates are to be approved by a dedicated government body (Federal Customs Service and Ministry of Finance are considered, says Kommersant). However, the decision to grant export duty relief to a specific field would be still made by the government. Currently, the discounted rates are set separately for each field by a joint decision of several ministries.
We see the Ministry’s intention to set up a specific formula as positive, as it would make the export duty relief scheme clearer and more transparent. However, as the decision to grant the relief would still be made separately for each field, these amendments do not significantly improve predictability. At this point, we do not see any implications of for oil companies’ operational or financial performance and do not expect any market reaction to the news.
Dmitry Loukashov, Alexander Kirevnin, Ekaterina Rodina, Elena Kopylova, Mikhail Zarkhi
VTB Capital analyst

oil, Russia

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