Downstream Rebate Frozen

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Russia's finance ministry has reportedly proposed postponing amendments to the oil products tax regulation since higher oil prices and a sharp devaluation of the ruble in the past three weeks would have resulted in increased payments for oil companies at a time when Moscow is looking to avoid additional expenditures. The plan was to change the so-called buffer mechanism, which reimburses refineries during times when the export parity exceeds domestic prices for gasoline and diesel. Refiners receive 68% and 65% of the difference between the netback and an arbitrary strike price, while airlines receive compensation for jet fuel according to a similar formula. The plan was to change the compensate rate to 83% for gasoline and diesel, but since export prices have risen dramatically and those domestically have plummeted, the current buffer is already generous.

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