Russia Lines Up Heavy Crude Export Tax Relief

The Russian government is considering the introduction of a significant new tax concession to make expensive extra-heavy crude extraction and refinement projects more viable, to boost the nation's export capacity.

Extra-heavy oil is significantly more expensive to refine than less viscous oil, and generally can only be refined to produce less valuable hydrocarbon forms such as gasoline and diesel.

Under the plans, which have received initial support from the Ministry of Finance, export duties on extra-heavy crude products would be reduced by 90% for ten years, possibly from as early as July 1, 2012. The government has said the relief would apply to products from crude of at least 10,000 centipoise - a measure of dynamic viscosity.

Having announced a 4.4% increase in the standard rate on crude exports for March, at current market rates the tax relief would be worth around USD51 a barrel, or USD365 per metric ton, for eligible projects.

Source: Tax News