Russian govt won't change oil export duty mechanism

The oil export duty mechanism is not to be changed, Russian President Vladimir Putin told reporters after his televised question-and-answer session Tuesday. "Export duties are linked directly to global oil prices, and we should not touch them," he said.

Under Russian law, oil and oil product export duties are regularly revised based on official price monitoring, , ITAR-TASS reported. The export duty increase is subject to approval by the government with a special ruling.

Meanwhile, Finance Minister Alexei Kudrin said earlier this month that the Russian government planned to make changes to the mechanism of setting oil and oil products export duties in order to keep inflation in check. Kudrin said that a special working group had been formed to prepare proposals on changing the mechanism.

Russia's Economic Development and Trade Minister German Gref also said earlier this month that we have to remove "the tight link between domestic taxes and global oil prices." There are three ways to contain domestic gasoline prices - by means of the royalty tax, exports duties and eliminating monopolies in the oil sector, Putin said Tuesday. But we can differentiate the royalty tax, depending on the well, field and quality, Putin said.

Avoiding monopolies and creating medium-size companies is the third way, he said. "They (medium-sized companies) already exist," Putin added. Russia's Prime Minister Mikhail Fradkov signed a ruling this month to set oil export duties at U.S. $179.9 per tonne starting October 1, an increase from the current $140 per tonne, due to increasing oil prices on the international market, Prime-Tass reported.