Lukoil has approached the Russian government seeking changes to the oil tax formula as discounts on Russian crude exceed $20 per barrel, a level that would force producers to make net payments into the budget rather than receive compensation, according to The Moscow Times, citing Izvestia.
The request comes as Russia’s largest private oil producers face falling realized prices from exports sold well below global benchmarks. Urals crude has been trading at deep discounts as higher freight costs, restricted access to Western insurance, and tighter oversight of tanker movements reduce net revenues on shipments to Asia.
The appeal for assistance comes as Moscow weighs how to stabilize output and tax revenues while avoiding further damage to state finances. Russia remains one of the world’s largest oil exporters, but much of its crude is now sold at prices far below international benchmarks, reducing revenues for both producers and the state.
Lukoil, unlike state-controlled Rosneft, has limited direct access to government backing, making sustained price discounts a more acute problem. The company has already faced pressure from asset sales, constrained access to financing, and rising operating costs tied to rerouted exports to Asia.
The developments follow recent reports of declining Russian oil and gas revenues in January and renewed European efforts to tighten enforcement on shipping and trade mechanisms that have helped keep Russian barrels moving. The government has already held discussions with major producers on tax and duty treatment as export revenues decline.
In recent weeks, Russia’s finance ministry has been reviewing oil tax and duty collections after January revenues came in well below expectations, prompting talks with major producers about short-term relief tied to output and exports. At the same time, crude shipments have faced interruptions from refinery maintenance and logistics constraints, tightening cash flow for some producers.
By Charles Kennedy for Oilprice.com
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