Russian Oil Woes

Russia's stiff tax on oil exports could be a key topic for discussion when President Clinton meets Boris Yeltsin in Vancouver Apr. 3-4. U.S. oil companies are complaining loudly that the $5.50-per-barrel levy on top of royalties is throttling their attempts to help develop Russia's huge oil reserves. About 30 Western petroleum companies are seeking exemptions from the tax.

One U.S. oil venture is already teetering toward collapse because of the tax. White Nights, a two-year-old joint venture of Phibro Energy Production and Anglo-Suisse Inc., may soon fail, says Brian A. Lavers, chairman of Phibro Energy. As political chaos mounts in Russia, White Nights is being hit with tax after tax "out of the blue" from various local authorities and faces exorbitant pipeline rates.

The clincher is the export tax, which makes White Nights unprofitable. White Nights won an exemption from the tax in July, but the tax was later reimposed. Customs agents kept the venture from exporting its usual 7,000 barrels a day of oil in January and February, making it nearly impossible to service its $60 million in loans.

The White Nights saga has ominous implications for Russia's oil future. Indeed, U.S. analysts now predict that Russia may stop exporting oil in 1995. Western investment and technology could turn that around. But not unless Russia straightens out its bureaucracy and curbs its tax shakedowns.