Oil Firms Ordered to Resume Exports

The state has ordered oil firms to resume full exports in November after they cut loss-making deliveries because of high duties and falling oil prices, industry and trading sources said Thursday.

The head of pipeline monopoly Transneft, Nikolai Tokarev, has said oil firms have slashed about one-quarter of their export plans in November, as they want the government to further cut export duties.

On Thursday, sources said Transneft warned oil firms against cutting exports after Tokarev met Prime Minister Vladimir Putin on Wednesday.

"The reason that is being given is that the budget needs money and we must meet obligations with customers. No one wants to hear that prices will only fall further," an industry source said on condition of anonymity.

He added that the order also applied to private producers. "You cannot really force private firms into it, but there might be [other] sanctions," he said.

A poll of trading sources last week showed that Russia's five biggest firms, Rosneft, LUKoil, TNK-BP, Surgutneftegaz and Gazprom Neft, had planned to cut November oil export plans by about 1 million tons.

The key reason for the cut is the system of Russian oil export duties, which are set based on Urals crude prices for a period of two months and are applied with a delay of one month.

But with global oil prices sinking, the government broke with this practice and has started revising duties more often.

The latest duty is set at $287 per ton from Nov. 1, which corresponds to an average Urals price of $97 per barrel.