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Russia proposes caps on oil export discounts -draft law

Published 12/02/2023, 09:41
Updated 12/02/2023, 09:45
© Reuters. FILE PHOTO: An aerial view shows Vladimir Arsenyev tanker at the Kozmino crude oil terminal on the shore of Nakhodka Bay near the port city of Nakhodka, Russia August 12, 2022. REUTERS/Tatiana Meel

MOSCOW (Reuters) - Russia's State Duma introduced a bill late on Saturday setting discounts for Russian oil exports, according to the lower house of parliament's website.

Under the draft proposal, the discount on dated Brent oil will be limited to $34 per barrel in April, declining to $31 in May, $28 in June and $25 in July.

The government has been debating how to calculate Russia's taxable oil price following the European Union's import ban and the resulting lack of a reliable price-setting mechanism.

Russia currently uses Urals price assessments in Europe's Rotterdam and Augusta ports, provided by commodity price reporting agency Argus, to determine its mineral extraction tax, additional income tax, oil export duty and reverse excise on oil.

On Friday, Reuters reported that Russia plans to fix the price of Urals crude oil at $20 per barrel below dated Brent for tax purposes after state oil revenue slumped in January.

Moscow relies on oil and gas income to fund its budget, but has been forced to start selling foreign currency reserves to cover a deficit that stretched to 1.76 trillion roubles ($24.8 billion) in January to cover the cost of the military operation in Ukraine.

© Reuters. FILE PHOTO: An aerial view shows Vladimir Arsenyev tanker at the Kozmino crude oil terminal on the shore of Nakhodka Bay near the port city of Nakhodka, Russia August 12, 2022. REUTERS/Tatiana Meel

Urals crude differentials to dated Brent slipped to minus $30 a barrel in December from minus $24 in November, remaining sharply below the single-digit discounts seen prior to 2022.

Russia said on Friday it will cut oil production by 500,000 barrels per day, or around 5% of output, in March, following the West's imposition of price caps on Russian oil and oil products.

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