Russia and Exxon Seek to Resolve Tax Dispute
A Stockholm, Sweden, arbitration court has postponed a hearing in a tax dispute between the Russian finance ministry and US oil and petrochemials ExxonMobil while the disputing parties try to resolve their differences out of court.
The arbitration court had been due to hear the case in the last week of April. ExxonMobil, which in 2015 filed a lawsuit claiming it overpaid Russian taxes on the Sakhalin-1 oil and gas project in Russia's far east, is asking for a tax rebate worth $637 million.
Exxon is said tob e arguing that the Russian finance ministry reduced the country’s profit tax in 2009 to 20% for production-sharing agreements such as the Sakhalin-1 project, but the US group continued to pay a tax rate of 35% after the project broke even in 2008.
One report said Russia has signaled its willingness to settle the dispute in an out-of-court agreement under undisclosed conditions. The case has gained prominence with the appointment of former ExxonMobil CEO Rex Tillerson as US secretary of state.
ExxonMobil was poised to invest in both the Barents Sea and the Bazhenov shale field in western Siberia but the plans were interrupted by US economic sanctions against Russia. The US group said it is unable to collect revenue from its stake in the consortium that operates the project off Sakhalin Island or in other unconventional gas projects such as the Arctic offshore shale drilling.
While Exxon calculates that it lost revenues of around $1 billion on its engagement, Russian state oil company, Rosneft, asserts that it had to postpone the planned Arctic drilling launch and bear $2 billion in development costs. Reports from Moscow have suggested the ministry is suing the US group for payment of back taxes.
According to published figures, ExxonMobil held a 30% stake in Sakhalin-1, Rosneft 20%, Japan’s Sodeco 30% and India’s ONGC 20%.
