Futures Jump in Russia as Government Moots Oil Tax Cuts

Russian stock futures climbed and contracts for OAO Rosneft rose as the government said that it may cut levies for some oil fields as soon as next month, boosting revenue for crude producers.

Futures expiring in December on the RTS Index in Moscow added 0.6 percent to 151,370 in New York yesterday. Futures due in December for state-run Rosneft, the nation’s biggest oil company, advanced 0.4 percent. The Market Vectors Russia ETF, the biggest exchange-traded fund that holds Russian shares, gained 0.3 percent to 29.81. The Bloomberg Russia-US Equity Index of the most traded Russian shares in New York slipped to the lowest level since Sept. 12.

Russia, the world’s largest energy exporter, will consider easing extraction tax charges for hard-to-recover and depleted oil fields, Deputy Prime Minister Arkady Dvorkovich said after the market closed in Moscow yesterday. The nation will also continue reduced tax rates for some fields in eastern Siberia until 2022, Prime Minister Dmitry Medvedev said in Moscow yesterday.

“Taxes are one of the major factors and if the government is really going to lower taxes paid by oil producers, it’s very positive for them and for Russian equity markets overall,” Ilya Kravets, who helps manage $100 million of investments at ED Capital, including crude producers OAO Lukoil and OAO Surgutneftegas, said by phone in New York yesterday. “It’s very good news for Russian oil producers.”

Rosneft futures gained to 212.50 rubles, or $6.82 per share in New York yesterday. Rosneft fell 1.1 percent to 209.54 rubles, or $6.73, in Moscow yesterday.

Lukoil Gains

American depositary receipts of Lukoil, the country’s biggest independent oil producer, erased an earlier decline of as much as 1.3 percent in the U.S. to gain 0.3 percent to $62.82 yesterday, settling at a 0.5 percent premium versus the company’s Moscow-listed shares. Lukoil rose 0.1 percent to 1,948.40 rubles, or $62.54, in Moscow yesterday. One share equals one ADR.

OAO RusHydro, Russia’s biggest producer of renewable energy, climbed 1.1 percent to $2.70 in New York yesterday. The ADRs closed at a 1.8 percent discount versus the company’s Moscow-listed stock. The stock fell 1.1 percent to 85.67 kopeks, or 2.7 U.S. cents, in Moscow yesterday.

The Russian government, which owns a 58 percent stake in RusHydro, may delay a decision on additional share sales by the company until the first quarter of 2013, Dvorkovich said.

‘Appreciated the Delay’

“The market appreciated the delay,” Sergey Beiden, an analyst at Otkritie Financial Corp. in Moscow, said by phone yesterday. “There might be a chance for some other mechanism of capital injection, rather than a share sale.”

The RTS Volatility Index retreated 3.2 percent to 30.63. The Bloomberg Russia-US index slipped 0.5 percent to 100.12 as oil retreated and European leaders disagreed on ways to address the region’s debt crisis. Crude, Russia’s biggest export earner, touched its lowest level since August in intraday trading in New York.

“The market realized global economic growth is slowing, with the European debt situation causing some very negative concerns,” Alexander Morozov, chief economist for Russia at HSBC Holdings Plc, said by phone from Moscow yesterday. “Oil is falling, pushing Russian equities further down.”

Oil Slumps

The government is extending tax breaks for offshore and hard-to-recover resources to stimulate output and meet President Vladimir Putin’s goal of more than 10 million barrels a day for at least a decade. Production climbed to a post-Soviet high of 10.38 million barrels a day in August, according to preliminary data from the Energy Ministry.

Oil for November delivery declined 1 percent to $91.93 a barrel on the New York Mercantile Exchange yesterday and is down 7 percent for the year.

Brent oil for November settlement decreased 1.5 percent to $109.76 a barrel on the London-based ICE Futures Europe exchange. Urals crude, Russia’s chief export blend, lost 1.6 percent to $108.36 per barrel yesterday.

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