Russia's Transneft, Rosneft Disagree Over Oil Transport Costs

MOSCOW (Reuters) — Russian oil pipeline monopoly Transneft has rejected a proposal by energy giant Rosneft to cut transportation tariffs following a fall in oil prices, the latest twist in a longstanding row between the state companies. 

Transneft and Rosneft are headed by allies of Russian President Vladimir Putin and have had a long history of differences over number of issues such as oil transportation tariffs, the construction of pipelines and loading schedules.

Igor Sechin, the head of Rosneft, asked Putin last week to align transportation tariffs with current oil prices, which plummeted to a two-decade low last month due to overproduction and the restrictive measures aimed at stopping the spread of the coronavirus.

Transneft, whose chief Nikolai Tokarev worked with Putin in the KGB in East Germany during the 1980s, hit back at the proposals, saying oil prices were expected to recover by the year-end.

“The discussed cuts in Transneft’s tariff will result in increase of private shareholders’ earnings at the expense of the state,” Transneft said in a presentation published at the weekend.

It also said, citing data from the finance ministry, that oil companies were already enjoying large tax breaks, which amounted to 1.6 trillion roubles ($22.1 billion) in 2019.

Some analysts say the public feuding between Sechin and Tokarev is symptomatic of a long period of uncertainty running up to 2024 when Putin is due to step down under current legislation. People will jockey for position and battles for influence will become more pronounced, they say.

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