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Russia will not discuss tax dispute at talks with Exxon — energy minister

June 03, 2015, 9:39 UTC+3 VIENNA
In April Exxon Mobil filed a claim to the Stockholm arbitration court requiring changing the interpretation of the Sakhalin-1 project Production-Sharing Agreement (PSA) paragraph on taxes
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VIENNA, June 3. / TASS /. The Russian government does not plan to discuss the tax dispute with the management of Exxon during talks on the sidelines of the OPEC seminar in Vienna, the Energy Minister Alexander Novak told journalists Wednesday.

"We have plenty to discuss with Exxon, we have a lot of joint projects. No, I do not think that we will be discussing the subject of the tax dispute," Novak said.

In April Exxon Mobil informed the Russian Energy Ministry about lodging a claim to the Stockholm arbitration requiring changing the interpretation of the Sakhalin-1 project Production-Sharing Agreement (PSA) paragraph on taxes.

ExxonMobil believes its subsidiary Exxon Neftegas Limited overpaid approximately $500 mln profit taxes on its Sakhalin-1 oil and gas project.

At the time of the PSA signing in the mid-1990s profit tax of 35% was imposed in Russia. Russia reduced the profit tax in 2009 to 20%, but ExxonMobil continued to pay at the earlier level of 35%, although it applies to the Finance Ministry with a request to lower the rate. According to the newspaper, Russia believes that PSA terms are not subject to change within its period of validity.

In March, ExxonMobil CEO Rex Tillerson came to Moscow for talks. Tillerson met with Deputy Prime Minister Arkady Dvorkovich, Energy Minister Alexander Novak, Finance Minister Anton Siluanov, and twice with the Executive Chairman of Rosneft Igor Sechin. As media reported, the officials listened to ExxonMobil arguments, but failed to come to an agreement. The issue will be further discussed by the Russian Government.

ExxonMobil is the Sakhalin-1 project’s operator, 30% belong to the Japanese Sodeco, Rosneft and the Indian ONGC own 20% stake each.

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