MOSCOW Feb 10 Some of the domestic refineries
of Russia's largest oil producer Rosneft have been hit
hard by tax reforms and weaker oil prices, putting a strain on
profits, sources and analysts told Reuters on Friday.
The government has tweaked tax for the oil industry, aiming
to encourage companies to produce better-quality oil products.
Starting from January, it hiked the export duty for fuel oil, a
low-grade product, under a so-called "tax manoeuvre".
According to think tank Vygon Consulting, oil refining
margins, which reflect the difference in the value of petroleum
products and the price of crude, averaged 6.3 percent in 2014
when the oil price was around $98 per barrel.
Refining margins fell to 1.8 percent in 2015 and seen at a
breakeven level this year with the price of oil around $50 per
A source close to Rosneft said the big refineries were a
"headache" for the company - particularly Syzran and Kuibushev
in the Volga region as well as Angarsk in East Siberia.
"The tax manoeuvre has put (Rosneft) large plants on the
verge of non-profitability," the source said.
He also said Syzran refinery had "negative core earnings".
"There has been no decision on a (possible) temporary shutdown
of the plant taken yet but the modernisation of the plant has
been slowed down," the source said.
Another source familiar with Rosneft plans said Kuibyshev,
Novokuibyshev, Syzran and Saratov had been hit the hardest by
the tax reforms and falling oil prices due to a high share of
low-grade fuel output.
Those four Volga-region plants have a total annual refining
capacity of over 30 million tonnes, or 600,000 barrels per day.
A Rosneft spokesman said the company would keep the Russian
downstream business and was not looking at options to sell some
of the plants.
Russian plants cut refining throughput by 3.5 million tonnes
in 2016 with plans to cut it further by 7 million tonnes this
year to 270 million tonnes, according to the energy ministry.
Rosneft's domestic refining capacity stands at around 100
million tonnes per year, including the Bashneft plants
it acquired last year.
Rosneft's downstream business has also been under strain due
to its deals to increase crude oil supplies to international
traders such as Glencore.
(Reporting by Oksana Kobzeva, Olesya Astakhova and Maxim
Nazarov; writing by Vladimir Soldatkin; editing by Susan Thomas)