Moscow has moved to change its process for taxing oil companies as steep discounts between various price levels have eroded key hydrocarbon revenues for the now-deficit-running government, the FT reports. The change from using the Urals standard to a Brent crude-based calculation system will reportedly capture a larger share of sales in data and generate an extra $8 billion of annual revenue for the state.
While the price fragmentation has enabled Russian oil companies to increase their untaxed profits, the Kremlin has flagged an impending crackdown, with Putin directing officials to close the loophole. Under the new system, the maximum Urals discount to Brent will be $34 a barrel, a number that will shrink to $25 in July.
Such reforms highlight growing complexity in Russian oil markets and increasing tensions between the government and oil companies over excess profits.