April 7, 2008 / 6:24 AM / 11 years ago

UPDATE 2-Kazakhstan may impose oil duty from 2008

(Adds analysts’ comments)

By Raushan Nurshayeva

ASTANA, April 7 (Reuters) - Kazakhstan may impose an oil export duty as soon as mid-2008 to stabilise domestic supplies, a senior government official said on Monday, in a development likely to worry potential newcomers to its oil business.

Officials have said that Western oil and gas companies’ existing operations in the Central Asian state will not be affected by the export duty as their production sharing agreements will not be changed.

New agreements, however, will stipulate flexible oil tax regimes including liability for the export duty.

Asked by Reuters on the sidelines of a government meeting if the duty would be introduced from next year as previously announced, Deputy Energy Minister Lyazzat Kiinov said:

“No, earlier. This year,” adding that it could happen as early as this summer. Kazakhstan had previously said it wanted the duty from January 2009.

Kiinov said the measure would apply to 27 million tonnes of oil exports, or about 40 percent of last year’s production.

The government is due to discuss his ministry’s draft proposals at a separate session on Tuesday.

Kiinov said the duty was likely to be $109 per tonne but did not say what global price it was based on, and whether the duty would move on a sliding scale.

Foreign and domestic oil players are watching the debate surrounding the crude oil duty closely as Kazakhstan, emboldened by record-high oil prices, continues to toughen up its energy legislation.

The Caspian oil producer set alarm bells ringing last year with a row with Western oil majors over the Kashagan field and by passing legislation empowering the government to break oil contracts with producers.

Vladimir Osakovsky, an analyst with UniCredit Aton, said the news could scare off newcomers looking to tap Kazakh energy reserves.

“The introduction of export duties is a very negative piece of news for investors,” he said. “The goal of the measure is to stimulate the domestic market, to saturate it with hydrocarbons. It is also an anti-inflationary measure.”

Kazakhstan announced plans last month to abandon subsoil contracts favoured by oil companies due to their liberal tax regime.

But it promised this would not apply to existing production sharing agreements held by all big Western players.

Other analysts said they were waiting for the announcement of the duty volume per tonne, which would shed some light on the measure’s impact on the industry.

KAZMUNAIGAS

Prime Minister Karim Masimov, addressing officials earlier in the day, said he hoped the government would agree with the latest proposals at the Tuesday session but gave no details.

KazMunaiGas E&P KMGq.L, the upstream unit of the national oil company, has complained about the duty and asked the government for exemption, but Kiinov said the company was likely to be affected by it.

He said, however, that the Western operators of the huge Tengiz and Karachaganak oil and gas fields would be exempted, confirming a stance voiced earlier by the government.

Tengiz is managed by U.S. major Chevron (CVX.N), while Karachaganak is run by a consortium led by Italy’s Eni (ENI.MI) and Britain’s BG BG.L.

So far KazMunaiGas has benefited from the government’s tougher policies in the sector, doubling its stake in the Kashagan oilfield as part of the final settlement with the field’s Western shareholders.

It also has the right to buy any oil assets before they are offered on the market, according to Kazakh legislation. (Additional reporting by Maria Gordeyeva; Writing by Maria Golovnina; Editing by Margaret Orgill)

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