Novatek gains due to tax manoeuvre more than others

As the Vedomosti has reported, this week the Government is likely to approve the final version of the tax manoeuvre in the Russian oil sector at the special meeting with the President, Vladimir Putin. Earlier, Rosneft’s head, Igor Sechin actively opposed the tax manoeuvre in the Russian oil sector, which led to the postponement of the decision. However, he finally gave his consent, as the Vedomosti reported.

The reduction of export duties will result in growth of Russian oil prices, calculated as a netback of the export price, the result of the tax manoeuvre will be the high probability of a decline in the refining margins, particularly at refineries with a low proportion of the light oil products output. Thus as a result of the manoeuver integrated oil companies with a large share of oil refining (ie, Lukoil, Bashneft, Gazpromneft) will suffer, although the negative effect will be partly compensated by an increase of the margin after the current upgrade of the refineries. Another risk related with the manoeuver is the fate of the current tax incentives for greenfield projects