Russia's Energy Minister said today oil companies could end up paying different export duties on East Siberian oil, a sign the finance ministry's fiscal hawks are getting the upper hand in the debate. A final decision on duties for East Siberian oil is one of the most eagerly awaited by the Russian stock market this year as it can either spur or depress stocks of companies focusing on the region - such as Rosneft or Surgut. "(Differentiation) is the opinion of the Finance Ministry and it could be one of the ways to reaching a compromise," minister Sergei Shmatko told reporters.
Differentiation would mean setting different duties for different fields depending in the quality of oil in the deposit, its distance from the main pipelines or other criteria. Twenty-two fields in the region, including state-run sector leader Rosneft's giant Vankor deposit, have won exemption from paying the export duties - a key source of budget revenues of the world's largest oil producer. But the finance ministry is concerned the tax break could drain 120 billion roubles annually from state coffers and have proposed the zero duty be replaced by a uniform levy on excess profits or other taxes while the energy ministry has insisted on keeping the current scheme.
"I want to say we have a constructive dialogue with the finance ministry. We are no longer talking about having or not having a zero duty for East Siberian fields. We are talking about adjustments for certain fields," Shmatko said in a Reuters report. As Russia's mature deposits dry up, the country is becoming increasingly dependent on East Siberian fields to ensure that production does not stagnate or decline.
JPMorgan forecasts East Siberia will account for 2.3% of Russia's oil output this year, up from about 1.1% last year. Russia abandoned the export duty for 13 East Siberian oil fields from 1 December and added nine more fields in East Siberia in the middle of January, but the decision on whether to impose the fees on the deposits is taken every month. "To set new rules for East Siberian fields every month would be wrong for the investment climate point of view. We are talking about more stable and long term decisions," Shmatko said.
