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Vankor losing preferences

A long-lasting struggle between Rosneft and the finance ministry over preservation of preferences for the Vankor field is finishing in favor of the ministry. As of May 1 the oil company is not allowed to use the preferential export duties rate; it will have to transfer the record high $454.7 per ton of oil to the budget considering the current oil prices. The preferential rate for Eastern Siberian deposits will remain at $211.7 per ton.

It should be mentioned that in addition to Vankor, two other large fields will be deprived of the preferences – Verkhnechonskoe (TNK-BP) and Talakan (Surgutneftegaz). Rosneft’s logic is quite understandable – the bad news should be offset by the fact that competitors of Russia’s major state oil firm are also to sustain losses.

From the point of view of collecting budget revenues in the pre-election period to ensure uninterrupted growth in social payments to the population and state subsidies to problem enterprises, the decision to reduce taxation preferences is quite justified. However, there are questions about the logic of organizing the fiscal system in the oil and gas sector where there are no constant and stable rules for everyone but there is a set of constantly renewed decisions on certain companies and deposits. Such fiscal confusion is a doubtful advantage in terms of attracting foreign and domestic investments in the Russian fuel and energy sector.

By Stanislav Mitrakhovich, NESF leading expert

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Analytical series “The Fuel and Energy Complex of Russia”:

Gazprom on the background of external and internal challenges
Regulation of Oil and Gas Sector in 2019 and Prospects for 2020
Fiscal Policy on Oil and Gas Sector: Revised as Often as Wikipedia
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Ukrainian Gas Hub: Climax at Hand
The “zero hour” comes in less than a month: the contracts for gas transit through Ukraine and for supplying Russian gas to the country terminate at 10 am on 1 January. Meanwhile, Gazprom and Naftogaz are very far from looking for a mutually acceptable solution. The entire European gas business is watching intently the negotiations between Russia and Ukraine. Everyone is waiting for a new “gas war”: the January 2009 events proved to be a serious test both to European consumers and to Gazprom as a supplier. Is there still a chance of agreement? If there is not, will Gazprom cope with its obligations to deliver gas to Europe? Is Russia bluffing as it assures that the new infrastructure and gas in underground storage facilities will enable it to get by without Ukrainian transit even as soon as this winter? What will happen to Ukraine itself at the beginning of 2020?
Digitisation and Its Implications for Oil and Gas: Myths and Possible Reality

All reports for: 2015 , 14 , 13 , 12 , 11 , 10 , 09 , 08 , 07

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