The Ministry of Finance proposed a new calculation of the price of Urals for calculating the mineral extraction tax – Kommersant
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The Ministry of Finance has drawn up a draft law that involves a new calculation of the price of Russian Urals oil for calculating the mineral extraction tax (MET) on oil. The document proposes to calculate the price based on the arithmetic average price for deliveries to ports in the northwest and south of the country, increased by the price of transportation by sea to Rotterdam and Mediterranean ports. About it “Interfax” said sources familiar with the text of the bill.
Interfax notes that the source of price formation in Russian ports is not indicated, and oil from Russian territory is not currently supplied to Europe due to sanctions. Agency sources suggest that when calculating oil taxes, they will continue to use quotes from the Argus pricing agency, but now not on a CIF basis (includes freight costs and insurance) in the European ports of Rotterdam and Augusta, but on a FOB (cost of oil before loading) basis in Russian ports.
According to the agency, the cost of transporting oil to European ports will be calculated according to the scheme determined by the Federal Antimonopoly Service. “If the procedure is not determined or the price is not published, then it will be $2 per barrel,” Interfax clarifies.
The proposed document also provides for a reduction in the Urals price discount to the Brent benchmark in calculating oil taxes from $20 to $15 per barrel in 2024, to $10 per barrel in 2025, to $6 per barrel in 2026. The same calculation is proposed in the draft state budget for 2024–2026. The agency notes that the department also proposed to give the government the right to increase the discount during the three-year period. At the same time, the Ministry of Finance believes that the Urals/Brent discount in 2024–2026 should be set at a level not exceeding $20 per barrel.
In July, Deputy Minister of Finance Alexey Sazanov stated that from 2024 in Russia they will no longer use quotes for Russian Urals oil calculated by Argus to calculate taxes. Then this was explained by the fact that the agency’s calculations based on CIF became irrelevant against the background of the introduction of a ban on the import of Russian oil in Europe. In October 2022, Argus began assessing the cost of Urals on a FOB basis; from January 2024, it plans to stop calculating prices for Urals on a CIF basis. The draft state budget for the next three years proposed the introduction of the TsSPB index (SPbMTSB oil index) in calculating the cost of oil. The draft budget being considered by the State Duma currently proposes choosing the largest of three values - the cost of Urals, the Urals/Brent discount or the TsSPB index.
Read more in the Kommersant article. “Oil is looking for a starting point”.
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