28 Dec 2017 09:32

Russian govt backs 16.7% cut in rate for pumping oil to China via Kazakhstan - Transneft chief

MOSCOW. Dec 28 (Interfax) - The Russian government has agreed to the Federal Antimonopoly Service's (FAS) proposal to reduce the rate for transporting oil to China through Kazakhstan by 16.7%, the head of oil pipeline monopoly Transneft , Nikolai Tokarev said in an interview with TV channel Rossiya 24.

"We were counting on finding fairness in the government, but the government, our shareholder, agreed with the FAS proposal. And in this way selectively supported the initiative of Rosneft . The shareholder said, we will carry out. Although no one's explained to us why exactly so, no one has justified this figure - why is exactly 16.7% needed, and not 17.3% or 2.2%. The question remains unanswered," Tokarev said.

"Yes, of course, we'll feel a negative financial result from this [decision]. But in the end it's not fatal. I think we'll overcome everything," Tokarev said.

FAS earlier raised rates for Transneft's services by 4% for 2018, although the company had requested a 21% increase. The regulator also cut the rate for transporting oil to China through Kazakhstan, a route used to transport Rosneft oil, by 16.7% from the current level.

Transneft deemed the regulator's decision to be unjustified and selectively in favour of the state oil major, and tabled the issue for consideration by the government commission for the fuel and energy sector on December 20. Transneft estimated that it will incur 1.2 billion rubles in losses from the rate cut on this route.

Deputy Prime Minister Arkady Dvorkovich said Transneft's request to raise its rates by 21% in 2018 took into account the government's plans to have the company pay out 50% of IFRS profit as dividends.