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. Last Updated: 07/27/2016

No Changes Planned for Oil Duties

The government plans no cuts in oil export duties next month as it needs to protect its budget needs, despite complaints from producers, although if prices stay low there could be concessions in December, a Finance Ministry official said Monday.

Alexander Sakovich, who is responsible for calculating the duties, said the ministry would stick to its current system of changing duties every two months. "The cut in November is not possible. The duties are set by the law for a period of two months, and the government cannot freely change it," he said.

"Why can the budget afford to share its surplus while oil firms say they cannot? … They start crying immediately. And I want to ask you: Do you think the budget is not suffering right now? It also feels the pain," he said.

The government cut the oil export duty for October and November by 23 percent to $372.2 per ton from the previously announced $485.5.

But as oil prices fell below $60 per barrel from more than $100 per barrel when the last monitoring took place, oil firms have asked the government to cut the duty in November.

Sakovich said Urals prices stood at $83 to $84 per barrel in September and October, meaning oil duties will drop to $304 to $309 per ton from December.

"But these are the maximum levels, so I wouldn't exclude oil duties going below $300 given the precedent in October. The key thing is whether oil sticks below $60 in November. If it does, there might be some concessions," he said.