Russian govt approves new method for calculating oil export duties
MOSCOW. April 1 (Interfax) - The Russian government has approved methods for calculating baseline and discounted export duties for oil and petroleum products.
Russian Prime Minister Dmitry Medvedev signed the order, which enters into force on April 1, on March 29.
The Economic Development Ministry has been instructed to calculate baseline and preferential rates on a monthly basis, taking into account average liquefied petroleum gas prices on the border with Poland (DAF Brest) and Urals crude prices on global markets (Mediterranean and Rotterdam). Information on the calculated rates must be posted no later than four days prior to the first of the calendar month in which the rates are to be applied.
Baseline and discounted export duties on oil and petroleum products were previously confirmed each month by an individual government order.
Simultaneously, the government has confirmed rules for supervising the quality of oil to which discounted duties might be applied. Under these rules, a company must submit a document describing the characteristics of the oil to the Energy Ministry 15 days prior to the start of the quarter. This certificate is confirmed and presented to the Federal Tariff Service (FTS).
The government-approved mechanism envisages that companies will prepare requests for discounted duties for certain new fields. These requests will prove that it would be uneconomical to develop these fields without preferential duties. The special duty will be valid until the project reaches a 16.3% rate of return.
Along with these rules, the government order dated March 30 confirms a list of fields entitled to discounted duties. So far the list contains 24 fields to which preferential rates have already been applied, including the Prirazlomnoye field, which is located on the shelf of the Pechora Sea. There are no new sections on the list yet. At the end of March, Energy Minister Alexander Novak said that ten or 15 new projects might be granted a preferential rate by the end of the year.
The decision to provide discounted duties for particular fields used to be made by individual government orders. The reasoning behind such decisions was not specified in the law. Furthermore, the government has approved rules for confirming the production of highly viscous oil under reservoir conditions of at least 10,000 Millipascal-seconds and with special physical and chemical properties produced at individual fields.
