Yesterday, Mr. Yergozhin, Head of State revenue department, stated that new export duty export duty rates on oil will be made public "after May 2015". The official stated that demand for oil is usually slow in summer and that is when the rate decrease should happen. However, he did mention that it was too early to say that rates may go down to zero.
Our view. The news is certainly positive for listed oil and gas companies in our coverage universe. Recall that in the beginning of February, we forecast a cut in duty rates from $80 to $40/ton. However the actual cut was to $60, which we thought was not enough to support oil producers in the current commodity environment. We believe the new export tax duty tax rate will be reduced to $40/ton as expected initially. We increase our TP for KMG EP to $10.5/GDR and maintain our Sell recommendation as we expect the new rates to last three years in the base case scenario. The company update for Nostrum Oil&Gas and Condor Petroleum are currently under review.