Russian Ministry Proposes Export Tax Cut for Light Oil Products

Russia’s Ministry of Economic Development has sent a proposal to the government to lower export duties on light oil products from 2012 in order to encourage companies to produce higher-value fuels.

Under the proposal, light and heavy oil products would have the same rate of export duty, equal to 0.55 times the export duty on crude oil, the Ministry of Economic Development said in an e-mailed statement today.

“In this manner the duty on light products will be lowered at the same time as the duty on heavy products is raised,” the ministry said in the statement.

Russia’s export duties currently favor the export of so- called heavy distillates, including fuel oil, which are more commonly produced by the country’s refineries, over light products, such as jet fuel.

The single rate will stimulate oil companies to “optimize oil refining structures” to increase the production of lighter, more valuable products while cutting back on exports of simpler products, the ministry said in the statement.

To contact the reporter on this story: Stephen Bierman in Moscow sbierman1@bloomberg.net.

To contact the editor responsible for this story: Guy Collins at guycollins@bloomberg.net.

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