East Siberian Oil Export Duty to Resume

Deputy Prime Minister Igor Sechin and Finance Minister Alexei Kudrin have agreed to reintroduce the export duty for East Siberian oil fields from July 1 to help fund the country's budget deficit.

A source said the duty will be lower than the normal tariff on other oil fields, set at $248.8 per metric ton from July.

"There is a letter, signed by Kudrin and Sechin. The position is agreed. The government should issue the order tomorrow," he said, adding that the duty will be set at 45 percent of the price in excess of $50 per barrel.

According to Reuters calculations, the July export duty for the East Siberian fields will be set at about $70 per metric ton.

The reintroduction of the tariff for far-flung East Siberian oil comes after a lengthy tug-of-war between Sechin and Kudrin, who has said the tax break could drain 120 billion rubles ($4.12 billion) annually from state coffers.

For their part, companies say they need the tax break to develop new fields. Russia's largest crude producer, Rosneft, chaired by Sechin, had threatened to stop funding the Vankor oil field — the main driver of its output growth — should the government reintroduce the tax.

Russia abandoned the export duty for 13 East Siberian oil fields from Dec. 1 and added nine more fields in East Siberia in the middle of January to support oil companies, which were hit by falling oil prices.

TNK-BP, whose Verkhnechonskoye field lies in East Siberia, was another beneficiary of the zero export duty, along with Surgutneftegaz, Russia's fourth-largest oil producer, which owns the nearby Talakan deposit.

The economy, still firmly focused on energy despite pledges to diversify, plunged into a deep crisis in 2008 when the price for Urals crude, Russia's main export commodity, fell from $140 per barrel to just above $30.