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Oil & Gas – Ministry of Finance publishes draft tax manoeuvre


The Ministry of Finance has published draft law on tax manoeuvre, according to Vedomosti.

Kommersant, however, reports slightly different numbers.

The discussion about the new tax regime for the oil industry continues, and it is still not clear what the final version will be given that even newspapers are mentioning different numbers. The direction is similar to what we expected (a decrease in export duties and excise coupled with an increase in MET).

Based on the above numbers, we estimate that the EBITDA of the top seven oil majors (accounting for affiliates and subsidiaries) will increase USD 2.8bn, USD 1.7bn and USD 4.7bn in 2015-17, compared with our current forecasts. Based on our company models (all macro and operating assumptions remain intact), we calculate that the proposed changes to oil sector taxation (excl. income tax) amount to USD 3.2bn, USD 6.2bn and USD 5.7bn of incremental additions to the budget in 2015, 2016 and 2017, respectively. This surprising contradiction – the simultaneous increase in sector profitability and growth in tax collection – can be explained by the fact that these tax changes are to be sponsored by third parties. That is first and foremost Belarus, independent refineries, other buyers of crude oil condensate and, of course, the consumers of gas oil in Russia, as well as independent bunkering and jet fuellers, etc. There are no new tax parameters for gas condensate, so it is unclear what the potential impact on gas companies would be. On the back of the currently available information, among oils Surgutneftegas, Tatneft (biased to upstream) and Bashneft (greater exposer to MET relief) are the key beneficiaries.

Given the numerous discussions, we think this development has likely already been priced in, and so we do not expect to see a reaction on the market.
Dmitry Loukashov, Ekaterina Rodina, Alexander Donskoy, Kirill Sharikhin, Ekaterina Kataeva
VTB Capital analyst

oil, gas, Russia

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