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Gazprom stuck with record tax bill after Ukraine defaults

ELENA MAZNEVA

MOSCOW (Bloomberg) -- OAO Gazprom was stuck with record export duty payments in May as Ukraine imported more gas without paying for it. Gazprom paid 61.9 billion rubles ($1.8 billion) on all its exports, data on the Treasury’s website show, almost 60% more than the same month in 2013. Most of the surplus stemmed from deliveries to NAK Naftogaz Ukrainy, a government official said, asking not to be identified because the information isn’t public.

Ukraine imported more gas in May to fill storage tanks as Russia raised prices in the wake of President Vladimir Putin’s decision to annex Crimea. Ukraine refused to pay for the gas, so the company had to find the tax from its own resources. Gazprom halted supplies to Naftogaz in June.

“Ukraine taxes cut Gazprom cash flow,” Ildar Davletshin, an oil and gas analyst at Renaissance Capital in Moscow, said in an interview. “The company had to pay them despite Ukraine non-payment.”

Shares in Gazprom fell 0.3% to 148.3 rubles at 1:18 p.m. in Moscow trading.

Ukraine owes Gazprom $5.3 billion for the past deliveries, the gas exporter said this week. Naftogaz won’t pay unless Russia sets a new, fair price, according to the Ukrainian company.

In April, Russia canceled two gas discounts it had granted to Ukraine, raising the price to $485 per 1,000 cubic meter from $268.50 in the first quarter. Gazprom withdrew the lower price offered to Naftogaz in December citing debts, and Russia restored an export duty.

Energy Ministry

That duty had been cut in 2010 under an agreement where Ukraine agreed to extend Russia’s lease to the Black Sea Fleet base in Crimea in exchange for cheaper gas. After Putin declared Crimea part of Russia, the government in Moscow said a lease was no longer needed.

Since April, Gazprom supplied about 7.74 Bcm of gas to Ukraine before halting shipments on June 16, Bloomberg calculations based on data from the Russian Energy Ministry’s CDU TEK unit show.

That’s $1.13 billion of export duty given the current fuel price, which Ukraine rejects, and a normal 30% tax rate, according to Bloomberg calculations.

If Russia hadn’t restored the full duty on exports to Ukraine in April the rate would be $45.5 per 1,000 cubic meters versus current $145.5, the government official said. That equates to an extra $775 million of tax payments.

Gazprom has asked the government for help with the tax because the neighboring country hasn’t been paying for gas, Russian Finance Minister Anton Siluanov said in May. No decision was made on helping Gazprom, and the Moscow-based company had to pay full duties in the meantime, the government official said.

The increase in May payments was a one-off situation, according to the official. As well as higher prices, the figure was inflated by the fact that Ukraine boosted imports to fill underground storage facilities. Export-duty payments decreased to about 32 billion rubles last month, when Russia stopped supplying gas to Ukraine, according to the official.

The press offices at Gazprom, Russia’s Finance Ministry and the Custom Service all declined to comment.

07/11/2014

 

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