Russia’s Energy Minister said on Tuesday 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.

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 percent of Russia’s
oil output in 2010, up from about 1.1 percent in 2009.

Russia abandoned the export duty for 13 East Siberian oil fields from
Dec. 1 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.

Source: Reuters

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