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Oils – adjustments to tax manoeuvre parameters might not be introduced before 2H15


The Ministry of Energy does not support changing the key principle of the tax manoeuvre, according to Kirill Molodtsov, deputy Minister of Energy, Interfax reports. Potential adjustments to the tax manoeuvre parameters might not be introduced before 2H15. No details have been provided yet.

We have said on a number of occasions that the tax manoeuvre, introduced on 1 January 2015, might have unpredictable consequences, which means manual governmental interventions ahead. Lower global prices for oil and oil products, along with a significant depreciation in the rouble, mean that its effect could well differ significantly from what was initially planned. According to our calculations, the likely result is that profitability at many of Russia’s oil refineries will decline below the breakeven point at the operating level. In addition, the internal market premium for oil products (namely, gasoline) is to move into negative territory, which could make export a more attractive alternative, unless domestic retail prices for motor fuel rise.

To recap, the Ministry of Energy had previously been discussing potential amendments to the tax manoeuvre. The MET calculation might be changed, as reported by Interfax. The basic MET rate might be increased from RUB 766 to RUB 795 this year, while the threshold oil price could be set at USD 17/t instead of USD 15/t. We calculated that these changes stand-alone might lead to a 2% Russian oils EBITDA increase due to the change in the tax burden by USD 0.3/bbl.

Dmitry Loukashov, Ekaterina Rodina, Alexander Donskoy, Kirill Komarov
VTB Capital analysts


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