Tuesday, September 16

Only in Russia: Oil Producers Losing Millions of Dollars

From today's Fairplay Daily News:
THE ABRUPT fall in the international price of crude oil below $90 per barrel has trapped Russian oil exporters, the second-largest in the world by volume after Saudi Arabia.

For the first time in their history, Russia's oil producers, led by government-owned Rosneft and publicly listed LUKoil, are transferring almost every penny they receive from customers for crude oil exports straight into the state budget.

Urals blend is now priced in Rotterdam at $88 per barrel. With the Primorsk FOB Urals price (ex-freight, clearing fees and port charges) at about $86/bbl, Russian companies are paying $68/bbl in export duties and another $17.40/bbl in oil extraction taxes. That results in more than $85/bbl being paid into the treasury in these two taxes alone.

Moscow bank analysts calculated that only meagre amounts go back to producers after tax and other costs are taken out, leaving the producers with an operating loss of $13/bbl.

A report by UBS in Moscow conceded that the Kremlin must rapidly raise its tax charges, saying that this is “a reminder of how vulnerable Russian oil companies are to a decline in oil prices”. - Fairplay
Of course once the profit is taken out of the product it makes little sense to actually do business, and even less so when the Government taxes you into the loss column. Even funnier in that everyone blames the oil companies for being evil and gouging customers...

So, just what is Russia doing with all that tax money? Just what is Russia going to do when the price of oil is $70 a barrel later this year and there is less money to steal?

1 comment:

davod said...

Isn't gangster socialism great.