Russian State Duma committee approves transition to 'Urals FOB+$2' quotation for oil taxes

MOSCOW. Oct 21 (Interfax) - The Russian State Duma's Budget and Tax Committee approved an amendment to the Tax Code, which leaves only one price quotation for Urals crude when calculating oil taxes in place of the previous three alternatives, at a meeting on Monday.

The amendments were proposed by the government for the second reading of bill no. 727330-8.

Current legislation in Article 342.3 of the Tax Code states that, beginning in 2025, the maximum out of three calculations is selected for determining the mineral extraction tax (MET) - either the Urals FOB calculation, published by the Argus agency and increased by the cost of transportation to European ports ($2 per barrel), the NSD quotation otherwise known as the Brent calculation, which has a certain discount, or the SPIMEX index, which was supposed to be applied from 2024 but the application of which was postponed to 2025.

The introduced amendments remove the NSD quotation and the SPIMEX index from the Tax Code.

Deputy Finance Minister Alexei Sazanov previously spoke about the planned changes. The "Brent minus discount" price, as well as the SPIMEX index, would no longer be used to calculate taxes and only the "Urals FOB + $2 per barrel" price would remain, he said.

At the same time, Sazanov did not rule out changes to the Urals FOB calculation. Many oil companies see the current quotation as artificial, as Russian oil is no longer transported to European ports due to sanctions imposed in 2023, with India and China now Russia's main markets. Argus has already begun publishing quotes for Urals at Indian and Chinese ports.

"For now the main thing we are discussing is that there is zero effect on budget revenues, but there's no decision yet, so for now the quotation is FOB+2," Sazanov said.