MinFin opposes changes to oil price indicator in calculation of MET - Sazanov

MOSCOW. April 13 (Interfax) - The Finance Ministry is against changing the Russian oil price indicator in calculation of the mineral extraction tax (MET), Deputy Finance Minister Alexei Sazanov told reporters.

"This is impossible, we still need indicative prices and representative indicators. Argus publishes all prices, and the Argus prices already take into account the Urals discount, as you know. Accordingly, we believe that this indicator is representative and there is no need to change it," he said.

Previously, Deputy Prime Minister Alexander Novak said that the government is proposing that MET be calculated based on the actual sales price rather than the quoted prices on the market as a measure to support fuel and energy companies.

Currently, the tax is calculated on the basis of the average monthly price of Urals oil on world markets (in US dollars) and the corresponding ruble exchange rate.

Novak later said that Urals today is tied to the price indicators of various rating agencies. "We are currently working with the Energy Ministry, with oil companies to ensure the implementation of this project through the creation of an exchange trading mechanism. This work is already underway, it will continue," the deputy prime minister said.

Sazanov also said the Russian Finance Ministry has proposed postponing consideration of the matter of incentivizing output of super-viscous oil for one year, while there are complications with filling the budget.

"We have proposed postponing consideration for one year; to postpone consideration of the matter until the first quarter of 2023. We understand that if the decision were taken that we need to boost additional output, then we would of course need to incentivize super-viscous oil in the long term. We have proposed postponing consideration of the matter for one year, as we currently have issues with filling the budget, with fulfilling expenditure obligations; and this would inevitably lead to a decrease in income from the mineral extraction tax (MET)," Sazanov said.

According to Sazanov, ministries have delayed a fuel damper adjustment by "a couple of months" because the market is in surplus.

"The issue is on hold for now. So far, everything is okay with fuel supply in the domestic market so there is an opportunity not to introduce a damper in a higher amount due to the fact that the domestic market is surplus where fuel is concerned," Sazanov said.

Asked whether ministries would return to the discussion of this issue this year, he said: "No, the issue is not on hold for that long. We'll delay it by a couple of months. We'll now be looking at the balance in the domestic market for petroleum products. When the market is in surplus, it makes little sense to pay extra for the damper. If supply is greater than demand, then the market balances itself, there is no additional pressure on prices."

Sazanov said there was an understanding that "the fuel market is in surplus for April-May, so the Finance Ministry's position is let's put the damper decision off for the time being."