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Post: The Federation Council supports the law to limit the discount on the Russian oil Urals

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The Federation Council supported the law limiting the discount of Ural oil to Brent when calculating taxes

MOSCOW, February 22 – RIA Novosti. At a meeting Wednesday, the Federation Council supported the law limiting the reduction in Russian Ural oil in relation to the price of Brent in calculating oil taxes from April 1 of this year.

The document changes the procedure for setting quotas for Russian oil, which is used to calculate the mineral extraction tax (MET) for oil production, the surcharge on the extraction of hydrocarbons, and the excise tax on petroleum raw materials.

If Ural oil in April is more than $34 per barrel cheaper than the reference Brent oil (North Sea Date quote), then the price of the Russian mark will be fixed for tax purposes at the cost of Brent minus $34. Similarly, in May, the cost of the Urals for tax purposes will be set at $ 31 per barrel, discounted to Brent, in June – $ 28, and in July – $ 25. If the discounts for Russian oil are less than the stated figures, the taxes will be calculated based on the real cost of the Urals.

The RF Ministry of Finance announced that the transitional period for applying a discount to the Brent price will allow oil companies to adapt to the new procedure for calculating taxes according to Uralic quotas.

Now the price of Russian Urals oil is calculated according to the data of the Argus pricing agency. The Ministry of Finance relies on these quotations when calculating export duties and oil taxes. In October, Argus launched a new port-based Urals valuation system in Russia as it lost its importance due to the EU embargo. The Ministry of Finance stated that it will continue to use the Argus quote in 2023, but will evaluate the appropriateness of switching to other quotes in the first quarter.

The law also increases the price differential used to calculate the damping mechanism of gasoline from $20 to $25 per barrel. At the same time, a price difference is introduced when calculating shock absorbers for diesel fuel. From April 1 to the end of 2023, the price difference limit will be $10 per barrel.

These changes were developed following Putin’s instructions to ensure that the reduction in Russian oil resulting from the sanctions does not pose a budgetary problem. Deputy Finance Minister Alexei Sazanov emphasized that regulation in oil taxation is needed not for additional budget revenues, but for saving about 660 billion rubles in 2023.

The document will enter into force on April 1, 2023, but not earlier than a month from the date of official publication.

Russian oil price ceiling
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Russian oil price ceiling

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Source: Ria

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