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Main page > Comments > Fuel & Energy > Crude exports and refining: the tug of war Crude exports and refining: the tug of warThe taxation novelties concerning the Russian oil sector discussed currently in the Russian mass media again raise the question of what is more important: production and exports of crude oil that generate substantial quick profits or refining? Judging by the latest reports, the state is readying to seriously shift the fiscal pressure from crude exports onto the sphere of processing. Russia's deputy finance minister Sergey Shatalov was quoted as saying that export duties on oil products in the Customs Union could be increased up to approximately 85% to 90% of the oil duty. The current duties are substantially lower - 70.7% of the oil duty on light oil products and 38.1% on dark oil products. This can be viewed as preferences in processing turning into the lack of incentives to invest in development of deposits. Among the beneficiaries (at least in the short-term perspective) of the decisions suggested by the government are practically all Russian oil firms that actively export crude oil. This is especially to the advantage of Rosneft that urgently needs to pump crude into the recently launched ESPO (otherwise this pipeline may fail to reach its breakeven point). On the other side, the policy of technological modernization of the economy, including the oil and gas sector, declared by state authorities risks becoming the "main loser" in this game. In the long-term perspective, refusing support to refining in Russia (this concerns not only tax incentives but the course of Russian companies at building and buying refineries abroad, not in Russia) may turn out badly. By Stanislav Mitrakhovich, NESF leading expert |
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