Azernews.Az

By Bloomberg

Exxon Mobil Corp. notified Russia it has filed a claim to recover taxes imposed on its oil venture in the country’s Far East, the Energy Ministry said Thursday.

The claim, linked to levies paid by the Sakhalin-1 offshore project that Exxon operates, was filed to Stockholm-based international arbitration, Energy Ministry spokeswoman Olga Golant said by phone without elaborating. Vedomosti newspaper reported Thursday that the U.S. producer valued the claim at $500 million.

Exxon may cut its demand by half if Russia agrees to lower the venture’s profit tax, Vedomosti said, citing an unidentified person with knowledge of the matter. The oil producer’s Moscow office didn’t respond to requests for comment.

The dispute began six years ago when Sakhalin-1’s tax for 2008 came due and intensified after the U.S. and Europe agreed to impose sanctions against Russia over the separatist conflict in Ukraine. The measures forced Exxon to abandon drilling in Russia’s Arctic, a region the country is depending on to buoy future oil output.

Exxon is demanding a new profit-tax rate in the venture’s agreement with Russia’s government after changes in local tax legislation, two officials in Moscow said last week. The company seeks a rate of 20 percent, down from 35 percent set in the production-sharing agreement in place since 1996, the officials said.

The U.S. investor also wants to get back tax in amounts it paid above the reduced rate for the past seven years, they said.

Shale, Offshore

Sakhalin-1, with crude output of more than 160,000 barrels a day in the first quarter, is Exxon’s largest project in Russia for now. Its ventures with state-controlled OAO Rosneft to develop Russian shale and offshore Arctic areas were halted by sanctions last year. Exxon said in February the sanctions against Russia may cost it as much as $1 billion.

Exxon holds 30 percent of the Sakhalin-1 project, while Rosneft and ONGC Videsh Ltd. each own 20 percent stakes. Japan’s Sakhalin Oil & Gas Development Co. holds the remaining 30 percent.

The Russian government is assessing the tax issue, and there’s no final decision, Energy Minister Alexander Novak said March 27. Russia is preparing its own proposal for the U.S. investor, targeting an out of court resolution, according to Vedomosti.