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. Last Updated: 07/27/2016

Kasyanov Approves Hikes On Crude, Fuel Oil Tariffs




Prime Minister Mikhail Kasyanov has signed a resolution raising export tariffs on crude oil from 20 euros ($18.97) to 27 euros per metric ton and on fuel oil from 12 euros to 20 euros a ton, the government said in a statement Monday.


The tariff hikes, which come on the back of sustained high global oil prices, will go into effect one month after their publication in the government's official newspaper, Rossiiskaya Gazeta.


The government did not say Monday when the resolution would be published. Kasyanov said after a Cabinet meeting last week that the tariff increases should come into effect at the beginning of August.


The prime minister also said last week that the tariff on crude exports could be further raised to 34 euros a ton and on fuel oil exports to 27 euros a ton if oil prices remain high. A 34 euro tariff would give the government 17 percent of the sale price on a $27 barrel of oil.


With oil prices Monday at about $31 a barrel for benchmark Brent and $27 for exports of the national benchmark Urals brand, the government's decision to tap into the profit-heavy heyday being enjoyed by domestic oil majors is not unexpected, oil analysts said.


"Oil company profitability continues to increase, and the government continues to get its share of the economic rent of the nation's natural resources," said Stephen O'Sullivan, oil analyst with United Financial Group.


The tariff increases are not expected to affect domestic or export supplies, since sales abroad will continue to be far more lucrative. Crude sells on the local market for about $15 a barrel.


The crude tariff hike, if implemented at the beginning of August, will merely skim about 1 percent off the already fat net profits for 2000 being reaped by domestic oil companies, according to UFG.


The nation's No. 1 oil giant, LUKoil, for example, would lose $36 million from a forecasted $3 billion in


revenues.