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Kazakhstan to impose oil export duty from May 18

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Kazakhstan will introduce an oil export duty of $109.91 per ton from May 18, according to a decree published in official media on Thursday.

The measure, signed by Prime Minister Karim Masimov on April 8, is aimed at taming inflation and raising budget revenues. It will not apply to Western majors developing Kazakhs fields but it is a worry to potential newcomers who will be liable. The decree, Kazakhstan’s first such measure since it gained independence in 1991, was published in the official Kazakhstan Pravda newspaper on Thursday and will come into effect 30 days after its publication, according to Kazakh legislation. Its publication was in line with market expectations after officials said the measure would be enforced from mid-May.

The duty is based on the average Q1 global oil price of $714.9 per metric ton, or about $94 per barrel (one ton of Kazakh oil roughly equals 7.6 barrels). The government has assured the Western operators of the huge Tengiz and Karachaganak fields -- including US oil major Chevron, Italy’s Eni and Britain’s British Gas -- that they will be not be liable. But, since Kazakhstan plans to abandon the more flexible production sharing agreements such as those held by Tengiz operators altogether, newcomers on the Kazakh market will have to pay the duty. The Caspian nation produced 67.5 million tons of crude in 2007 and exported just over 60 million tons. This year’s production is seen at 70 million tons. The duty will apply to 27 million tons of oil exports, or about 40% of last year’s production. (Reuters)

 

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