Page 9 - FSUOGM Week 14 2021

FSUOGM POLICY FSUOGM

Lukoil takes Rosneft to supreme

court over tariff dispute

RUSSIA RUSSIA’S Lukoil is taking a long-standing dis- the company had “established and maintained
pute with state-owned rival Rosneft over oil for several years a monopolistically high and
The conflict has been transport tariffs in the country’s Far North to the economically unjustified price” for handling oil.
going on since 2018. supreme court. Lukoil sought to overturn the regulator’s rul-
The conflict has been going on since 2018, ing in lower courts but was unsuccessful, and
when Rosneft complained to the Federal Anti- has now resorted to the country’s highest court.
monopoly Service (FAS) that Lukoil was charg- It argues that the high tariffs are necessary to
ing too high tariffs for oil transport from the recoup its investments in the 240,000 barrel per
Varandey terminal on the Pechora Sea. day (bpd) oil terminal.
Lukoil currently charges $38 per tonne Mid-sized oil producer Bashneft began devel-
($5.2 per barrel) to ship oil from Varandey opment of the Trebs and Titov field in 2010, invit-
from the Titov and Trebs oilfields in the Nenets ing Lukoil to join the project the following year.
region. Titov and Trebs are operated by Bash- The pair launched oil production in 2013. Rosneft
neft-Polyus, which is 75% owned by Rosneft and then entered the venture through its takeover of
25% by Lukoil. Rosneft wants to halve the charge Bashneft in late 2016, securing its majority stake.
to $16 per tonne, but Lukoil is understood to be Trebs and Titov produced only 4.9mn tonnes
only willing to consider a $10 discount. (98,000 bpd) of oil last year, versus 165,000 bpd
The FAS ruled in favour of Rosneft in the in 2017. Rosneft chose in late 2017 to drastically
dispute in March 2019, concluding that Lukoil reduce output at Trebs and Titov to comply with
had abused its dominant position in the local OPEC+ restrictions, conveniently putting extra
transhipment market. Rosneft had argued that pressure on Lukoil as well. ™
PROJECTS & COMPANIES

Lukoil warns it may mothball Caspian

field after losing tax breaks

RUSSIA RUSSIAN oil firm Lukoil has warned it may subject to EPT because it is a greenfield project.
have to mothball the Korchagin oilfield in the Alekperov therefore asks that the licence be
The company has Caspian Sea after losing tax breaks, Kommersant divided up so it can only move Korchagin to the
traditionally paid zero reported on April 5 citing sources. EPT regime.
exporty duty on its Lukoil and other Russian oil producers were The CEO notes in his letter that Lukoil had
Caspian offshore oil. stripped of significant tax breaks at their more planned to invest a further RUB60bn ($790mn)
challenging projects last year under controver- in Korchagin’s development prior to losing the
sial tax reforms backed by the finance ministry support, having already invested RUB140bn
and aimed at increasing payments to the budget. in the project to date. The cancellation of this
The company’s Caspian Sea fields have tradition- investment will reduce government revenues
ally paid zero export duty on their oil, but this and hurt the local economy, he said. Korchagin
break was rescinded at the end of last year. was brought on stream in 2010.
Lukoil CEO Vagit Alekperov wrote a letter Lukoil similarly said in February it would
to First Deputy Prime Minister Andrei Bel- have to revise its investment plans at highly vis-
ousov in February warning that the loss of cous fields after losing its tax breaks. A company
support could force the company to reduce its official said at the time that Lukoil would main-
investments at Korchagin or halt production tain output at the highly viscous Yaregskoye field
altogether. The company wants to transfer Kor- in the Komi region at the current rate of 48,000
chagin to a new excess profit tax (EPT) regime, barrels per day, rather than increasing it to
designed to support projects that lost support 75,000 bpd, in light of the changes.
during the reforms. But current legislation pre- This plea apparently did not go unheard,
vents offshore fields from being moved to this with Russian President Vladimir Putin ordering
regime. a review of the taxation system for this classifi-
Complicating matters further, Korchagin cation of challenging field the following month.
is located within the same licence as Lukoil’s Whether or not Lukoil will be successful in claw-
Filanovsky deposit, which cannot be made ing back any of the lost concessions is unclear. ™

Week 14 07•April•2021 www. NEWSBASE .com P9