Vedomosti reports that the Eurasian Economic Union agreement, which the presidents of Russia, Belarus and Kazakhstan are to sign this week, assumes that the trade liberalisation of the energy sectors of the three countries will be launched in 2025. The base agreement comes into effect in 2015. The conception of the trade liberalisation of the oil, gas and oil products markets might be approved by 2016, and the programme of liberalization by 2018.
The Russian Government has been considering some amendments to the tax regime due to trade liberalisation between Russia, Belarus and Kazakhstan, which was supposed to come into force in 2015. The government suggested decreasing export duties for oil and oil products and increasing MET payments. There have been several suggestions from MinFin and MinEnergo. Nevertheless, we would not completely rule out some changes in oil sector taxation in Russia at some point in the future. For example, industry participants have mentioned on numerous occasions that crude and fuel oil export duty unification might be delayed (it was supposed to happen in 2015). Any delay in unifying fuel and crude oil export duties would help those companies that are behind with modernising refineries (e.g. Rosneft) and weigh on the economics of projects that have already been implemented, e.g. by Lukoil and Gazprom Neft. All in all, we believe that an unchanged regulatory regime would be positive for the Russian oils.
Dmitry Loukashov, Ekaterina Rodina, Elena Kopylova, Alexander Donskoy
VTB Capital analyst
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