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Category: Global Economy Sub-category: World Economy
Document type: news
The Russian government declared last week that it will not change the export duty on crude oil and products which includes the high export duties for gasoline and naphtha as well.
The proposal came after Russia's budget deficit spiked in January-February to 245.3 billion roubles ($8.3 billion).
Russia, currently exports 55 million tonnes of the product every year.
The 60:66 tax regime, introduced in October 2011, cuts the top marginal tax rate for most crude exports to 60% of the Urals price, from 65% previously.
Moreover, it also has placed a single rate for oil products of 66% of the duty for Urals. Previously, the export duty for light and heavy products was 67% and 46.7% of the export duty for Urals, respectively.
In addition to this, in May 2011 the government had also introduced export duties for gasoline and naphtha at 90% of that for Urals to limit export of the products and resolve fuel shortages on the domestic market.
However, in late March the energy ministry had submitted a draft proposal to the government to cut the marginal export duty for crude to 55% of the Urals price.
In January, Russian oil companies froze oil product prices at December 2011 levels, as part of measures to secure stability on the fuel market.
The industry watchers cried foul, saying that this would wipe out refiners' margins. Export duties and the mineral extraction tax are the major components of the country's taxation of the oil sector.
It has been observed that different groups are seeing this decision with different point of view.
Traders are of the opinion that the proposed decision may lead to a collapse in Russia's refining industry. Analysts, however say that in late March said prices might remain low until May, and then go up.
Moreover, some analysts also observe this declaration as a measure to win popularity for Vladimir Putin in his bid to be elected president in the upcoming elections.
It has been envisaged that crude oil and fuel oil would be subject to equal export duty by 2015.
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