Kazakhstan imposes $20-a-ton Oil Export Duty

    Kazakhstan has reintroduced an oil export duty it applied in mid-2008, then lifted in January of 2009 as oil prices tanked.
    It slapped a $20-a-ton duty on exports Tuesday. That amount would allow the government to obtain about $400 million in additional revenue by the end of the year.
    “Energy-rich Kazakhstan is restoring oil export tariffs as it seeks to plug shortfalls in the national budget” is the way the Associated Press put it.
    The good news for petroleum producers is that the duty is a fifth of the $110 a ton that the government imposed two years ago.
    The bad news for two big international consortiums is that they will have to pay the duty that they had avoided until Tuesday.
    The two, Chevron-led Tengizchevroil and ENI and BG’s Karachaganak, have maintained all along that their long-term production-sharing agreements with the government stipulate that they are exempt form export duties.
    Until now the government the government has gone along with them.
    But Tuesday it said it no longer believes their contracts prohibit the duties.
    The government’s re-interpretation of the export-duty contract provision is the latest in a string of steps it has taken to revise production-sharing terms with Tengizchevroil and Karachaganak.
    Government officials maintain the original agreements were unfair.
    The reason that international oil companies contend that production-sharing agreements should be inviolable is that they provide stable tax conditions to projects over their entire lifespan.
    Such agreements are essential to investor confidence in a country, they maintain.
    Many analysts dubbed Kazakhstan’s move to impose export duties on Tengizchevroil and Karachaganak “ resource nationalism.”
    The comparing it to efforts by Russia and other resource-rich nations to become more assertive with foreign investors at a time when oil prices are rising.
    Finance Minister Bolat Zhamishev said about 15 deals would be exempt from the export duty because of a stability clause in their contract. He did not name the projects.
    "We believe that they have no stability (clause) in their contract and thereby they will pay," he said of Tengizchevroil and Karachaganak.
    The Tengiz and Karachaganak developments are Kazakhstans's two biggest.
    The Kashagan development in the Caspian Sea will dwarf their combined production, however. It is one of the largest oil finds in the past decade.
    An ENI-led group will start commercial production at Kashagan this decade, Reuters reports.