Ukrnafta proposes that govt sets zero royalty if price of Urals oil falls lower than $30
Public joint-stock company Ukrnafta has proposed that the Ukrainian government revises oil royalty via connecting it to the price of Urals oil on the global market, according to the documents sent by the company to the Cabinet of Ministers of Ukraine, a copy of which has been forwarded to Interfax-Ukraine.
The company proposed that quotations of Urals Mediterranean and Urals Rotterdam are lower than $30, the royalty is set at a zero. With the quotations in the $30-60 range, the royalty is halved, and if the price of Urals oil is over $100 the royalty is increased by 1.3 times.
"We propose that public joint-stock company Ukrnafta has a chance to use all saved money that will be received from the reduction of the royalty to fulfill its investment program. All workover and drilling of wells will be organized in the way to increase production and funds to pay taxes," the company said in a letter to the government.
As reported, referring to Ukrnafta Head Mark Rollins, the fall in oil quotations to $33 per barrel will be a problem for the company, and if the oil price falls to $25 per barrel, Ukrnafta will stop generating operation money flow.