Russian expert says oil export duties to increase sharply
Text of the article by Vadim Visloguzov, entitled "The State Quarter. Duties Will Increase to a Quarter of the
Price of Oil" published on Russian newspaper Kommersant on 6 May
The oil export duties (41.60 dollars per tonne) imposed by the government as of 1 June will be an all-time high,
Aleksandr Sakovich, the head of the Russian Finance Ministry's Department of Revenue and Tariff and Customs Policy
said yesterday [5 May]. A record will be established thanks to the steadily increasing price of Russian oil in the world
market. However, this level will not stay unbeaten for long. Starting from 1 August a new scale of duties aimed at
removing oil excess profits will be established at the level of 52-57 dollars per tonne.
According to legislation, the export duty on oil is set by the government on the basis of a two-month monitoring of
the price of Urals oil on the European market. In addition officials conform to scales of maximum duty rates fixed in
the law on the customs duty. According to information from Aleksandr Sakovich, the average Urals price according to the
results of price monitoring for March-April of this year was 30.5 dollars per barrel, compared to 28.30 dollars per
barrel in January-February. On the basis of that the Russian government is ready to set the export duty rate for oil at
41.60 dollars per tonne (right now it is 35.20 dollars per tonne). The new export duty rate on oil products will be
37.50 dollars per tonne (90 per cent of the duty rate for oil).
Previously the Russian government's Commission on Foreign Trade Protection Measures and Customs and Tariff
Policy ratified these kinds of decisions. With the reorganization of the government this commission was abolished. The
new procedure for preparing government decrees presupposes that its draft as a preliminary measure will be reviewed by
the heads of the Finance Ministry, the Ministry of Economic Development, the GTK [State Customs Committee] and the
Ministry of Industry and Energy. It is expected that this will happen by this week and by 11 May the draft will go to
the government. According to legislation, in order to introduce new duties from 1 June of this year, the decree must be
officially published no later than 20 May.
The rate being introduced will be the highest one since the introduction of this duty. The reason is obvious - the
continually rising price of Russian oil, which since February 2002 has been linked to the amount of the duty. However,
this record will not last long.
We recall that at the end of April the State Duma and the Federation Council [lower and upper houses of the Russian
parliament] approved a law drawn up by the government that was aimed at removing up to 3.3bn dollars in excess profits
from the petroleum sector. In order to do this, the base rate for the oil extraction tax will be increased from the
present R347 to R400 a tonne and instead of the present three-tier scale for export duties a four-tier one will be
introduced. The maximum customs rate (applied now) for oil priced at more than 25 dollars a barrel (Urals 182.50 dollars
per tonne) is 29.20 dollars per tonne plus 65 per cent of the sum exceeding this level (right now 40 per cent).
Right now the law passed by both houses awaits the signature of President Vladimir Putin. If the document is signed
by the head of state and published before 1 June, the new scale will come into effect from 1 August. According to
Aleksandr Sakovich's calculations, after its introduction (providing that the present average price of Urals crude
oil remains at 30.50 dollars a barrel) the amount of the duty calculated according to the new rules will be 55.30
dollars a tonne. This means that after having sold a tonne of crude oil on world markets for 223 dollars, the oilmen
will have to give back a quarter of this sum to the state just in the form of a customs duty.
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