The government may reinstate an export tax on 22 east Siberian oil fields from July and drop state-run Rosneft's Vankor project from the select group next year, as the Finance Ministry aims to close a widening budget gap.
The Finance and Energy ministries have "nearly agreed" on canceling the current exemption for the fields and setting a discounted tax rate from July 1, Deputy Finance Minister Sergei Shatalov said Friday in a telephone interview. The proposal may be submitted to the government next week, he said.
Russian oil producers have said high taxes may lead them to slow work at new deposits and delay investments, as traditional fields go into decline. The Finance Ministry estimates that the budget will lose 120 billion rubles ($3.9 billion) of revenue this year because of the current exemption, Shatalov said.
If the proposal is approved, the loss to the budget would narrow to 50 billion rubles next year, he said. The country suffered its first deficit in a decade last year.
"It very much may be that already this year Vankor will reach the required level of profitability that it will not need support," Shatalov said.
The Finance Ministry proposes raising the price at which it starts taxing crude exports to $50 per barrel for the group of east Siberian oil deposits, Shatalov said. Companies start paying export duties on crude from other fields when the price is $25 per barrel, he said.
The list of deposits will be revised, and deposits will gradually lose their tax privileges, Shatalov said.
Rosneft may lose the preferred tax status on Vankor, the country's largest new oil project, at the end of this year, he said. TNK-BP's Verkhnechonsk deposit would keep the break until the end of next year and Surgutneftegaz's Talakan field until the end of 2012, Shatalov said.
The other select fields "aren't a problem, as no one has started developing them."
Vankor, which began production in August, reached 264,000 barrels of oil a day this month, Rosneft said May 17. At peak output, the remote field may produce more than 500,000 barrels per day, equivalent to 5 percent of the country's current output.
Surgutneftegaz plans to spend 98 billion rubles ($3.2 billion) by 2013 to develop oil fields in eastern Siberia, according to an article in the company's corporate magazine. This year it plans to supply 2.5 million tons of oil from the Talakan and Alinskoye fields to Russia's new link to Asia, the magazine said.
ESPO crude, a blend from the East Siberia-Pacific Ocean pipeline, should trade at premiums to relative benchmarks because of its quality, David Martin, senior energy analyst at JPMorgan Chase, said Friday.
"When we look at the crude quality it should trade at premiums to the relative benchmarks," Martin said at a conference in London. "It seems to be effectively a better than average quality crude, certainly compared to Middle Eastern grades. It is reasonably low sulfur and certainly better than a Urals benchmark or an Oman benchmark crude."
The spread between Brent and Dubai crudes may narrow as more Russian oil goes to Asia through the ESPO pipeline, cutting volumes to the Mediterranean Sea and northwest Europe, he said.