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Russian giants face off in oil export tariff row

Exports from Trebs and Titov fields at risk as legal spat between Rosneft and Lukoil escalates after latest court ruling over cut in transshipment fees

A protracted legal row between Russia’s state-controlled producer Rosneft and privately owned Lukoil over crude transshipment tariffs has intensified following the latest court ruling, threatening the stability of oil exports under their Bashneft-Polyus joint venture.

Moscow’s Arbitration Court has rejected a request by Lukoil subsidiary Varandeysky Terminal to suspend earlier court orders that demanded the company reduce the Varandey transshipment tariff for Bashneft-Polyus crude exports from 23 October.

Rosneft and Lukoil, which hold respective stakes of 75% and 25% in the joint venture, have been locked in the legal tussle since March this year after a request from Rosneft for a significant reduction in the Varandey fixed transshipment fee of about $5.20 per barrel was backed by Russia’s federal anti-monopoly agency FAS.

While Rosneft has not officially disclosed its desired fee, earlier reports indicated the state-run giant was demanding a threefold cut in the price.

Varandey Terminal operates a floating Arctic loading terminal used by Bashneft-Polyus for crude shipments from the Trebs and Titov oilfields in the Nenets region of northern Russia that have been developed by the joint venture.

The terminal operator has warned the court that such a low tariff would be uneconomic for continued operations at the export facility, which could in turn halt production from the fields as there is no alternative shipping route.

The joint venture’s oil production from the fields has been running at around 22,000 barrels per day this year.

Lukoil executives have repeatedly stated the fixed terminal fee, which has been in place for six years, is due to the high running costs of maintaining such a terminal in severe Arctic weather conditions.

The arbitration dispute between the two companies has escalated in recent months as each of the parties has gained favourable rulings that were subsequently overturned.

Varandeysky Terminal is now appealing a recent ruling of the Ninth Arbitration Court of Appeals that overturned earlier court decisions to keep the terminal fee unchanged, and reinstated the FAS’ instruction to reduce the fee.

The next hearing in the ongoing litigation between the co-venturers has been set for 9 December at the Arbitration Court in Moscow.

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