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. Last Updated: 07/27/2016

Kudrin, Khristenko Clash Over Oil Profits

A conflict is brewing between deputy prime ministers Alexei Kudrin and Viktor Khristenko over the question of oil companies’ profits.

Khristenko — who earlier this month was appointed by President Vladimir Putin to run a new committee controlling access to export pipelines — wants oil companies to bid for export quotas at an open auction next year.

Click here to read our Special Report on oil and gas.

Kudrin, the finance minister, has other ideas and wants to increase the state’s share of oil profits by raising export duties.

At a meeting Monday with Prime Minister Mikhail Kasyanov, Kudrin, surprising Khristenko, announced that his committee for protective measures in customs policy was planning to approve a new scale of export duties.

Various proposals for a possible scale linked to the monthly price of oil have been provided by the Economic Development and Trade Ministry, Finance Ministry and Energy Ministry.

Officials in the ministries said that once Khristenko had recovered from the news, he demanded an explanation from Kudrin in no uncertain terms.

Kudrin was unavailable for comment Tuesday having left for St. Petersburg. Khristenko’s office refused to comment, saying "Kasyanov is aware of the problem — the last word is his." The prime minister has ordered an explanation.

The export auctions lobbied for by Khristenko would mean that oil companies would pay significantly more to the budget than now, when additional quotas are essentially allocated by the Energy Ministry. The government committee and tenders would end the scheme of kickbacks to officials.

The oil companies appear to much prefer Kudrin’s proposal for increased duties, particularly the version submitted by the Energy Ministry.

According to a presidential administration source, it was written by an oil company head and would have companies paying an extra $10 to $12 per ton, which at current market prices of $210 to $218 per ton would be easy to stomach.