OREANDA-NEWS. July 20, 2009. The Russian government adopted a resolution regarding beneficial export duty for oil extracted at 13 Eastern Siberian fields. The new export duty will be launched for a 9-month period, effective 20 September, reported the press-centre of OTKRITIE FC.

View. The short list of fields includes oil fields operated by Surgutneftegaz (7 fields), Rosneft, TNK-BP and Gazprom Neft. Since the rate of the beneficial export duty was not specified, it is difficult to estimate its potential effect on the oil producers’ operating incomes and margins. The government had earlier intended to abolish the export duty for Eastern Siberian oil, but opted for a beneficial export duty instead.

The time frame of for the new duty seems quite short (less than the previously mentioned 1-3 year period). However, a beneficial export duty could lend temporary support to the biggest oil producers amid the economic downturn. We believe that the key beneficiary of this decision will be Surgutneftegaz, since it is the biggest player in the region.

Valuation. Surgutneftegaz trades on P/E at a 35% discount to the remainder of the energy sector, while Rosneft trades on P/E at a 41% premium to the rest of the energy sector.

Action. This news could have a positive short-term impact on the stocks of oil majors, especially Surgutneftegaz. Our long-term price for the stock is US1, with a BUY recommendation.