Increase of oil export customs duty to adversely affect oil companies in Kazakhstan

Astana, Kazakhstan, March 18

By Daniar Mukhtarov - Trend:

Increase of export customs duty on oil will adversely affect the public oil companies working in Kazakhstan, expert on Kazakh oil and gas sector, Sergei Smirnov believes.

"An increase in export customs duty on oil will adversely affect the public oil companies working in Kazakhstan, specifically, the KazMunaiGas (KMG EP), which exports 75 percent of the total volume of crude oil," Smirnov told Trend on March 17.

He said a number of oil companies will now give to the budget $20 per ton more than before.

"The price of shares of these companies may also reduce (though not for long)," he added.

At the same time, Smirnov said that the companies such as Tengizchevroil and Karachaganak Petroleum Operating are not paying export duties, because they are working under production sharing agreements (PSA).

Last week, Kazakh government signed a decree to increase the export customs duty on crude oil from $60 to $80 per ton starting from March 12.

The export customs duty on oil in Kazakhstan was introduced in August 2010 in the amount of $20 per ton for all companies exporting oil, except for those working under the PSA. In January 2011, the export customs duty was doubled to $40 per ton, and then increased to $60.

The export customs duty does not go to the national fund, which accumulates proceeds from the commodity sector, but goes directly into the budget.

Kazakh Economy and Budget Planning Minister, Yerbolat Dossayev said the export customs duties were bringing about $3 billion to the budget, with 95 percent of this amount accounting for duties on oil and oil products.

Therefore, it is expected to increase incomes of the national budget this year due to increasing rates of the export customs duty.

"It should be noted that in Russia the export customs duty is the main tool for withdrawal of industry superprofits and the duty rate is indexed monthly on the basis of global oil quotations. In Kazakhstan the export customs duty rate is not only for many times lower than the Russian one (amounting to about $400 per ton), but is not tied to oil prices on the world market," Smirnov said.

He believes that the high rate of export customs duty in Russia forces the resource holders to upload domestic oil refineries with crude materials, as a result of what almost half of produced oil is processed in this country.

"This is while only about seven million tons of oil out of 82 million tons produced in Kazakhstan, is being processed (the same amount is delivered to the factories of Russia)," the expert said.

Translated by E.A.

Edited by C.N.

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