28 Dec 2024 11:19

FOB Black Sea quotation to replace DAF Brest in formula for calculating Russian LPG export duties from 2025

MOSCOW. Dec 28 (Interfax) - The Russian government has approved changes to the formula for calculating export customs duties on liquefied petroleum gases (LPG), with the FOB Black Sea price quotation becoming the new pricing indicator in its structure starting in 2025.

Prime Minister Mikhail Mishustin has signed resolution no. 1922. The document was published on the official portal of legal information.

As reported, the amendments were developed by the Economic Development Ministry in response to the European Union's complete ban on importing Russian LPG. "This change is required to mitigate the risk that the DAF Brest indicator will no longer reflect actual export routes for Russian LPG starting in January 2025," the ministry said.

Prior to the document's approval, export duties on LPG were based on the average DAF Brest (Polish border) price. At an average price below $490 per tonne, the duty was zero. For prices between $490-640 per tonne, a coefficient of 0.5 was applied; for $640-740 per tonne, the coefficient was 0.6; and for prices above $740 per tonne it was 0.7.

The European Union imposed restrictions on LPG imports from Russia at the end of 2023. The ban applies to liquefied propane and butane, ethylene, propylene, butylene and liquefied butadiene, as well as liquefied gaseous hydrocarbons not elsewhere classified. A one-year transitional period allowed European importers to purchase Russian LPG under previously concluded contracts. These sanctions have now come into full effect.