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The Russian Finance Ministry announced today that the export duty for the country’s most popular Urals blend of crude oil will be lowered to US$90.40 per metric ton, from US$92.70. The higher-viscosity crude blends export duty will also be lowered, to US$10.90, from US$11.20. The new duty rates will go into effect on December 1, the ministry said.
The announcement comes on the heels of a bigger one, made by central bank governor Elvira Nabiullina. At a meeting of three economy committees in parliament yesterday, Nabiullina said that Russia is ready to change its economic model to rely less on mineral resources exports.
The transition, Nabiullina admitted, will take a while and will not be a smooth process, but as soon as next year, Russia may register GDP growth, albeit at a modest rate of less than 2 percent. Reuters quoted her as also saying that monetary policy should remain relatively tight to counteract inflationary pressures.
The news about lower duties for crude oil and fuels – some of these are also to be exported at reduced rates as of December 1, namely gasoline and naphtha – raises some bigger questions, however. The chief among these is whether Russia, which has been vocal although vague in its support of the OPEC production freeze, has decided to go its own way and do whatever it feels it must to keep oil revenues coming.
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The move announced by the Finance Ministry very much resembles what Saudi Arabia did in August, when it lowered substantially the export price for its crude for the Asian market. That happened after Saudi Arabia, in June, raised prices for Asian customers on optimism about returning demand, which proved to be short-lived.
Like Saudi Arabia, Russia sells a lot of its oil to Asian clients, and in recent months has indicated more than once that when it comes to oil and gas, Asia is a top priority. Whether the economic transition, prompted by the oil price slump, will start anytime soon, is an abstract question. Concrete reality shows that Russia still relies on its crude for most of its income and that it is seeking to build its international market share in oil and fuels.
By Irina Slav for Oilprice.com
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Irina is a writer for the U.S.-based Divergente LLC consulting firm with over a decade of experience writing on the oil and gas industry.