FOB Black Sea quotation may replace DAF Brest in formula for calculating export duties for LPG from 2025

MOSCOW. Nov 6 (Interfax) - The FOB Black Sea quotation may become the new price indicator for calculating export customs duties on liquefied petroleum gases (LPG) instead of the DAF Brest indicator, a draft government resolution published on the regulation.gov.ru portal said.

The document was prepared by the Russian Economic Development Ministry.

"This change is required to mitigate the risk that the DAF Brest indicator will no longer reflect actual export routes for Russian LPG starting in January 2025 due to the ban on imports of Russian LPG to EU countries that will come into effect at that time," the document said.

Currently, export duties on LPG are based on the average DAF Brest (Polish border) price. It is zero at average price below $490/tonne, at a price of $490-640/tonne - 0.5, at $640-740/tonne - 0.6 and above $740/tonne - 0.7.

The European Union imposed restrictions on LPG imports from Russia at the end of 2023. The ban applies to liquefied propane and butane, ethylene, propylene, butylene and liquefied butadiene, as well as liquefied gaseous hydrocarbons not elsewhere classified. The sanctions came into force on December 19, but taking into account a one-year transition period, direct LPG supplies to the EU will be prohibited from the end of 2024.