Russia expects to maintain Customs Union limitations on oil, fuel deliveries in 2018-2020
MOSCOW. April 25 (Interfax) - Russia is counting on maintaining some of the quotas and other limitations on deliveries of oil and fuel within the Customs Union currently in place until 2018-2020, Deputy Finance Minister Sergei Shatalov said.
There is currently "a fairly balanced system of tariffs and non-tariff limitations," Shatalov said. They provide quotas on oil deliveries to Belarus and Kazakhstan, a ban on deliveries of light oil products from Kazakhstan to third countries, a ban on deliveries of dark oil products from Russia to Kazakhstan, deliveries of light oil products to Kazakhstan in agreed quantities, etc., he said.
"It's a fairly complicated arrangement. The question is will it be maintained when the Common Economic Space is formed? Since this is a higher degree of integration, the next step following the Customs Union, the participants are insisting on canceling these limitations. The simplest way for other states and the most complicated for us is lifting all the limitations," Shatalov said.
He expressed hope that Russia's partners in the Customs Union would reach an agreement concerning partial preservation of the quotas and limitations. "For now there has been a discussion at the level of prime ministers. The next meeting is in Minsk on April 29. I hope that the presidents will put the matter to rest there," he said.
"Today there is an understanding. We advanced among the states the proposition that the main restrictions that currently exist may be maintained for an extended period, until 2018-2020, so that they can be phased out by 2025. By that time we will work out a strategy and as a result of this strategy we will proceed further, transform this system," he said.
Maintaining restrictions to 2018-2020 refers primarily to quotas on shipments and bans on shipments of dark and light oil products, he said. "If we manage to agree on this package, then only compensation from Belarus remains outside the bounds of the agreement. I won't venture to forecast what the decision will be. As far as I understand, Belarus is not prepared for this yet," Shatalov said.
He said that if the quotas and restrictions within the Customs Union are maintained, the tax maneuver in the Russian oil sector will be continued, "but not at the pace that is envisioned now."
"We began to raise the natural resource extraction tax (NRET), lower export duties last year and we have this programmed for 2015-2016. We think that it for 2017 it is possible to continue moving at the same pace, maybe the pace will be adjusted a little. This will depend on how the 2015 problem related to fuel oil will be resolved," Shatalov said.
The ideal solution, he said, would be to keep everything as it is in order to continue the gradual course begun last year under the tax maneuver.
The most difficult scenario for Russia could be a complete elimination of all restrictions and the most aggressive planning, he said. "This scenario has the biggest risks, because in this case we could theoretically lose oil revenues. We're talking about a total of about $33 billion in additional losses that we could have per year. Supposing if we don't manage to reach an agreement [with Customs Union partners], then we'll be forced to make our own decisions. Hypothetically, we could opt to dramatically lower our export duties and shift the tax burden to the NRET - an export duty on oil on the level of Kazakhstan's," Shatalov said.
"In that case, the amount of subsidies to Belarus and Kazakhstan decreases, prices for oil and motor fuel on Russia's domestic market increase dramatically. We'd have to virtually lower excises to zero in order to curb prices on the domestic market. Something would have to be decided with jet fuel, petrochemicals, road funds. The budget classification, the fiscal rule would have to be changed. And a whole range of other negative consequences," Shatalov said.