Higher Fuel Export Taxes May Lead to Russian Bunker Price Hike

Monday March 23, 2015

Russia's increased export tax on fuel oil is worrying the country's far eastern bunker exporters and suppliers, who warned that the change may hike fuel prices and make Russian players less competitive, Platts reports

Legislation changes announced late last year mean that fuel oil taxes rose to 76 percent of the tax on crude oil in 2015, up from 66 percent, a change which some have complained will squeeze profit margins. 

The plans also call for the duty to rise to 100 percent of the crude oil tax by 2017.

According to a delegate at the Russian Far East Bunker Supermarket conference last week, although the far east region currently has an annual captive volume of two million megatonnes, fuel prices in the region will need to become more financially competitive to go beyond that. 

An unnamed source also said that provided all favourable factors fall into place, the region was on course to double its bunker sale volumes from last year's 8.1 million megatonnes. 

Ships have long since employed a strategy of heading to Eastern Russia for cheaper bunkers, with some ships having even sought to go around present laws which prohibit bunker-only calls by purchasing small amounts of goods like mineral water. 

However, it was reported in October last year that the region's ports had begun to lose its pricing advantage as the price of oil slipped, narrowing the spread between fuel in Russian ports and East Asian ports like Singapore