OREANDA-NEWS. August 11, 2009. The Russian government intends to introduce a new unified export duty for all petroleum products effective 2010. According to Vedomosti, citing a spokesperson from the Ministry of Economic Development, the new unified export duty could amount to 55% of the domestic crude oil export duty. Their source in the ministry did not specify a formula for this unified duty calculation, reported the press-centre of OTKRITIE FC.

View: Currently the customs duty for light petroleum products amounts to 73% of the crude oil export duty, while the fuel oil export duty does not exceed 39-40% of the crude export duty. This scheme for introducing a unified duty at 55% of the crude oil export duty assumes a hike in the fuel oil customs duty and a reduction in the duty for light petroleum products. If this decision is adopted, the key beneficiaries could be Gazprom Neft’s refineries, which have a low share of fuel oil output (not higher than 20-25%). However, this decision could be negative for Rosneft’s refineries, as their share of fuel oil output amounts to 40%.

Valuation: Gazprom Neft’s P/E amounts to 7.9x and the stock trades at a 19% discount to the rest of the energy sector. Rosneft stock trades at a 40% premium to the energy sector.

Action: We view this news as a long-term positive for Gazprom Neft’s stock and a long-term negative for Rosneft’s stock.