Russia to scrap E.Siberia oil tax from Dec - source

Thu Nov 26, 2009 11:33am EST

* Zero export duty will apply to 13 oilfields

* Rosneft, TNK-BP, Surgut to benefit

* Will apply to first Kozmino crude cargo

* Russia hopes to spur investment in East Siberia

By Robin Paxton and Katya Golubkova

MOSCOW, Nov 26 (Reuters) - Russia will introduce a zero duty on East Siberian crude oil exports from Dec. 1, a government source said on Thursday, in a long-awaited move designed to spur investment in virgin oilfields and revive stagnating output.

Thirteen oilfields will be exempt from paying export duties, offering substantial savings for Russian oil firms operating in the region, including sector leader Rosneft (ROSN.MM), TNK-BP TNBPI.RTS (BP.L) and Surgutneftegaz (SNGS.MM). "The order on the zero export duty for 13 eastern Siberian fields will take effect from December 1," the source told Reuters on condition of anonymity.

The government had already taken the decision to abolish the duty in principle, but had yet to say when the ruling would come into effect. No time limit has been set for its application.

Russia, where monthly crude output topped 10 million barrels per day in each of the last two months, is currently the world's largest oil producer as Saudi Arabia persists with OPEC-led production cuts.

Production has recovered this year after suffering its first drop in a decade in 2008 and the latest spike in output follows the launch of state-controlled Rosneft's Vankor field in the Arctic -- one of the deposits set to benefit from the zero duty.

Vankor is currently producing almost 180,000 barrels per day, Rosneft's vice-chairman for finance and investments, Peter O'Brien, told Reuters. Production at the field is set to peak at more than 500,000 barrels per day in 2014.

Despite this year's recovery, Russia is concerned that a lack of investment in new oilfields to replace depleted West Siberian deposits could stifle Energy Ministry plans to raise crude production by approximately 10 percent by 2030.

The ministry's plan, published on Thursday, envisages crude oil output rising to between 530 million and 535 million tonnes in 2030 from last year's 487.6 million tonnes.

But this plan is contingent on East Siberian fields, which contributed only 3 percent of Russia's oil production last year, growing their share to 18-19 percent over the next two decades.

ASIAN SUPPLIES

East Siberia's huge oil reserves, which include TNK-BP's Verkhnechonskoye field and Surgut's Talakan deposit, also underpin Russian plans to diversify crude supplies to Asian markets.

The Energy Ministry said in its report that the Asia-Pacific region, led by China, Japan and South Korea, will absorb between 22 percent and 25 percent of Russia's crude oil and refined product exports by 2030, compared with the current 6 percent.

Rosneft and oil pipeline monopoly Transneft (TRNF_p.RTS) struck the biggest supply deal to date when they agreed to sell 300 million tonnes of crude to China over two decades in return for a $25 billion loan. [ID:nLL583841]

The government source also said Rosneft would be able to ship its first cargo from Russia's new oil port on the Pacific, Kozmino, without paying an export duty.

Rosneft sold the 100,000-tonne cargo, which will load on Dec. 27-29, to Finnish trader IPP Oy at a premium of $0.5 per barrel to the regional benchmark Dubai crude. [ID:nGEE5AM2CS]

Russia's government sets oil and oil product duties every month, based on the monitoring of international prices for Russia's mainstay Urals crude blend URL-E URL-NWE-E.

The crude oil duty was set at $231.2 per tonne for November and is set to rise by about 17 percent to approximately $271 per tonne from Dec. 1. [ID:nLG326876] (Writing by Vladimir Soldatkin, editing by William Hardy) ((vladimir.soldatkin@reuters.com, +7 495 775 12 42, Reuters Messaging: vladimir.soldatkin.reuters.com@reuters.net))

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