According to Vedomosti, the Russian government is considering some amendments to the already implemented tax manoeuver. The reason for the idea is that starting from 2015, Russia would not be able to set limits on the export of crude oil and oil products through Kazakhstan and Belarus. The paper suggests that this could lead to a shift of the export routes to those countries, as the export duty rates are substantially lower there. Vedomosti also writes that the export duty rate might be decreased up to USD 80/t, from the current level of USD 384/t, with a corresponding hike in mineral extraction tax.
These numbers do imply a substantial reshuffle in the structure of taxes paid by the oil companies. Given the significant differences in the refining to production ratio between Russian oil companies, we would expect these potential changes to have materially different effects on the companies. Moreover, this would lead to an increase in domestic oil product prices, which would also need to be addressed. All in all, the changes in the approved in 2013 tax manoeuver would be negative for the sector perception, as it would decrease the transparency and confidence in the sustainability of the tax scheme. However, we believe that the initiative is at the initial stage and, given a lack of details, we would not expect any market reaction.
Dmitry Loukashov, Alexander Kirevnin, Ekaterina Rodina, Elena Kopylova
VTB Capital analyst
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