CRUDE AND OIL PRODUCTS: Logistics. Export. Taxes. Customs - Series of workshops 21 - 22 April 2008, Moscow, Russia

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Crude and Oil Products: Logistics, Export, Taxes, Customs

Series of workshops

21 - 22 April 2008, Moscow, Russia 

This unique project designed to target specialists of oil & gas producing and trading companies. A two-day modular series of workshops will take place on the 21-22 of April 2008 in Moscow, Swiss Hotel Krasnye Kholmy.

The series of workshops comprise approximately 20 training modules which delegates can attend in any order during the two days according to their preference. These modules feature detailed coverage of the following:

• Crude and oil products logistics (pipelines, rail, oil terminals, shipping, storage, blending)
• Taxation of crude production (trends, severance tax (NDPI), tax planning tools)
• Taxation of export and sales of crude and oil products, application and return of VAT, excise duties
• Customs regulations and formalities (for crude producers, traders, for different modes of transportation, losses accounting, etc.)

The workshop will be facilitated by leading Russian and international industry experts and government officials who are willing to share their knowledge and experience. They will cover the latest developments in related legislative framework and practice. Among the speakers and delegates will be representatives of the Ministry of Finance of Russia, Federal Tariffs Services, Transnefteprodukt, Russian Railways, PriceWaterhouseCoopers, Deloitte, Lukoil Overseas, CDU of the Energy Sector, Channoil Consulting, TNK-BP, Statoil, Caspiy Neft, Lukoil, Karachaganak, Convenant Ressources, Mol Hungarian Oil and Gas, Societe Generale Corporate and Investment Banking, Nobel-Oil, ChumpassNeftedobytcha, AGIP KCO Kazakhstan, Telf AG, Salavatnefteorgsinez, Totsa Total Oil Trading Moscow, Transport & Services, VNT SA, Crudex Petroleum, Rosneft, Efremov-Kautschuk GmbH, KDA & K, Interstate Bank, BMP Trading GmbH and many others.

 ATTENTION!  Register three delegates from a company and get a 30% discount for the third attendee.

 Do not miss this unique opportunity to enhance your level of competence and awareness of latest industry developments!

DAY I. 21 April 2008

 Logistics for Traders

Module 1: Shipping via Transneft pipeline system. Tariffs of Transneft, JSC

• Trunk pipelines system of Transneft, JSC. Major routes. Capacity
• Access rights. Main requirements to users. Cession of access rights to a third party
•  Export scheduling. Amendments procedure
• Regulations and quotas covering crude volumes subject to shipping

Speaker: Olga Vronskaya – Chief Specialist, Oil & Gas Industry Monitoring Division, CDU of the Energy Sector

•  Trunk pipelines system of Transnefteprodukt, JSC. Major routes, capacity and tariffs

Speaker: Philippe Nikonov – Vice-President, Transnefteprodukt, JSC

Module 3: Oil Terminals and Overall Transportation Economics

• Efficiency of Export Routes- Baltic Ports
• Oil Storage and Handling Contracts
• Oil terminal tariffs

Speaker: Ben Holt

Module 4: Contango and Use of Storage

• Market Structure for Crude Oil and Products
• Use of Storage for Contango Plays
• Use of Futures and Swaps in Contango Trading
• The value of the option to store oil

Speaker: Ben Holt

Module 5: Ocean tanker freight. Worldscale system. Efficiency of Transport Routes

• Sale of Oil: Property and risk pass from Seller to Buyer at vessel's flange at loading port FOB, CIF, C&F DES, DAF, DDU
• Tanker Types and Standards. Ocean Tankers- Size Ranges. Vessel Information
• Clarkson’s Tanker Register
• Side-by-side loading/ trans-shipment (STS). Transshipment Area Locations (TSAs)
• ‘Worldscale’ Freight Pricing System and Worldscale Tanker Freight Rate System
• Chartering: Laydays and Laytime
• Russian Rivers and Canals. Russian Waterway Vessels

Speaker: Ben Holt

Module 6: Rail transportation of crude and oil products. Tariffs policy of Russian Railways, JSC

• Major routes. Upcoming developments in rail transportation of petroleum products
• Rail tariffs for petroleum products export. Tariffs policy
• Reduced tariffs, discounts and the scope of application

Speaker: Aleksander Sinev – Deputy Head of the Transport Regulation, Department of the Federal Tariffs Service of the Russian Federation

Module 7: Quality Issues and Relevance for Storage

• Specifications and Potential for Contamination
• The growing issue of ultra-low sulphur content
• Blending and its use for Creation of Value

Speaker: Ben Holt

DAY II. 22 April 2008

Taxation on crude oil production

Module 8: Current oil production taxation trends in Russia

• Economics of oil production (changes in the share of taxes in proceeds from sale of oil in domestic and international markets)
• Reforms (changes in the calculation of severance tax(NDPI), profit tax, planned amendment to Art. 40 TC RF, etc.)

Speaker: Anna Blacheva – Senior Consultant, Tax & Legal, Deloitte

Module 9: Severance tax – NDPI

Speaker: Ekaterina Gryzlova – Consultant, Tax and Customs & Tariffs Policy Department, Ministry of Finance of RF

Module 10: Tax planning tools in oil production

• Recourse to tax privileges
• Accounting policy
• Use of non-resident holding entities
• Transfer prices
• Substantiation of economic feasibility of transactions

Speaker: Anna Blacheva

Taxation of export deals

Module 11: Application and return of VAT in domestic and export sales of oil products

• VAT in sales of goods within the RF
• VAT application in export deliveries of goods
• Zero tax rate substantiation confirmation procedure
• VAT covering use of transportation services for (shipping of) exported goods 
•  Identifying place of delivery of services for VAT application purposes

Speaker: Anna Lozovaya

Module 12: Fiscal accounting of export operations and PSA related activities

• Fiscal accounting of export operations and PSA related activities.
• Crude and products export operations profit tax.
• Excise duties application procedure for petroleum products operations (identifying tax base, applying tax deductions, applying an excise rate, excise payments proce dure and timeframe, completing customs declaration)
• Accounting policy for fiscal purposes and treatment of oil & gas industry enterprises

Speaker: Anna Blacheva

Customs

Module 13: Customs regulation of crude and products export operations

• New Customs Code: developments in legal regulation of crude and products export depending on mode of transportation;
• Special customs procedure for movement of goods by means of pipeline transport;
• Issues of law enforcement and application;
• Planned amendments to the Customs Code of the RF

Speaker: Anna Litovchenko – Manager, Customs Consulting Division, STS Logistics

Module 14: Customs declaration procedure and clearance in export deliveries of crude and products for producers, traders (non-producers), agents

• Customs declaration procedure and clearance in export deliveries of crude and products. Documents required. Submission timeframe. Competent customs authorities/bodies.
• Specifics of customs clearance of crude and products export volumes for producers, traders (non-producers), agents

Speaker: Anna Litovchenko

Module 15: Specifics of customs clearance of goods shipped using multi-modal transportation arrangements (pipeline-transshipment–rail, marine)

• Specifics of customs clearance of goods shipped using multi-modal transportation arrangements (pipeline-transshipment–rail, marine)
• Record of loss during transshipment and transportation of goods up to the RF border required for customs and taxation purposes.
• Payments due in connection with movement of crude and products across the customs border in pipeline or rail transportation modes

Speaker: Anna Litovchenko

Module 16: Record of loss during transshipment and transportation of goods up to the RF border required for customs and taxation purposes 

• Enforcement of customs duties and tax payments (VAT and excise duties). Collection and return procedures.
• Specifics of international customs transit regime in crude export operations.

Speaker: Anna Litovchenko

Please note that some speakers are awaiting a final confirmation and the organizer has a right to change the speakers and timing according to the content of the series of workshops.

Glossary

Oil products are useful materials derived from crude oil as it is processed in oil refineries.

Specialty end products:

• Gaseous fuels such as propane, stored and shipped in liquid form under pressure in specialized railcars to distributors.

• Liquid fuels blending (producing automotive and aviation grades of gasoline, kerosene, various aviation turbine fuels, and diesel fuels, adding dyes, detergents, antiknock additives, oxygenates, and anti-fungal compounds as required). Shipped by barge, rail, and tanker ship. May be shipped regionally in dedicated pipelines to point consumers, particularly aviation jet fuel to major airports, or piped to distributors in multi-product pipelines using product separators called pipeline inspection gauges

• Lubricants (produces light machine oils, motor oils, and greases, adding viscosity stabilizers as required), usually shipped in bulk to an offsite packaging plant.

• Wax (paraffin), used in the packaging of frozen foods, among others. May be shipped in bulk to a site to prepare as packaged blocks.

• Sulfur (or sulfuric acid), byproducts of sulfur removal from petroleum which may have up to a couple percent sulfur as organic sulfur-containing compounds. Sulfur and sulfuric acid are useful industrial materials. Sulfuric acid is usually prepared and shipped as the acid precursor oleum.

• Bulk tar shipping for offsite unit packaging for use in tar-and-gravel roofing or similar uses.

• Asphalt - used as a binder for gravel to form asphalt concrete, which is used for paving roads, lots, etc. An asphalt unit prepares bulk asphalt for shipment.

• Petroleum coke, used in specialty carbon products such as certain types of electrodes, or as solid fuel.

• Petrochemicals or petrochemical feedstocks, which are often sent to petrochemical plants for further processing in a variety of ways. The petrochemicals may be olefins or their precursors, or various types of aromatic petrochemicals.

Diesel or diesel fuel is a specific fractional distillate of petroleum fuel oil  that is used as fuel in a diesel engine.The term typically refers to fuel that has been processed from petroleum, but increasingly, alternatives such as biodiesel or biomass to liquid (BTL) or gas to liquid (GTL) diesel that are not derived from petroleum are being developed and adopted. For clarity, petroleum-derived diesel is increasingly called petrodiesel.

Pipeline transport is a transportation of goods through a pipe. Most commonly, liquid and gases are sent, but pneumatic tubes that transport solid capsules using compressed air have also been used.

Oil pipelines are made from steel or plastic tubes with inner diameter typically from 10 to 120 cm (about 4 to 48 inches). Most pipelines are buried at a typical depth of about 1 - 2 metres (about 3 to 6 feet). The oil is kept in motion by pump stations along the pipeline, and usually flows at speed of about 1 to 6 m/s. Multi-product pipelines are used to transport two or more different products in sequence in the same pipeline. Usually in multi-product pipelines there is no physical separation between the different products. Some mixing of adjacent products occurs, producing interface. This interface is removed from the pipeline at receiving facilities and segregated to prevent contamination.

Types of pipelines:

In general, pipelines can be classified in three categories depending on purpose:

1. Gathering Pipelines - Group of smaller interconnected pipelines forming complex networks with the purpose of bringing crude oil or natural gas from several nearby wells to a treatment plant or processing facility. In this group, pipelines are usually short, couple of hundred meters, and with small diameters. Also sub-sea pipelines for collecting product from deep water production platforms are considered gathering systems.

2. Transportation Pipelines - Mainly long pipes with large diameters, moving products (oil, gas, refined products) between cities, countries and even continents. These transportation networks include several compressor stations in gas lines or pump stations for crude and multiproducts pipelines.

3. Distribution Pipelines - Composed of several interconnected pipelines with small diameters, used to take the products to the final consumer. Feeder lines to distribute gas to homes and businesses downstream. Pipelines at terminals for distributing products to tanks and storage facilities are included in this group.

Freight is a term used to classify the transportation of cargo and is typically a commercial process. Items are usually organized into various shipment categories before they are transported.

This is dependent on several factors:

• The type of item being carried, i.e. a kettle could fit into the category 'household goods'.

• How large the shipment is, both in terms of item size and quantity.

• How long the item for delivery will be in transit.

 Laytime is the number of lay days permitted in a voyage charter to load or discharge a cargo, taking into account handling capacity and conditions in the port.

Demurrage is a daily compensation paid by the charterer to the owner of a ship for delays in loading and discharging beyond the time agreed in the charterparty (laydays).

Contango is a term used in the futures market to describe an upward sloping forward curve (as in the normal yield curve). One says that such a forward curve is "in contango" (or sometimes "contangoed").

Contango - market scenario when the forward price of a commodity is higher than the spot price.

The opposite market condition to contango is known as backwardation.

Backwardation - market scenario when the spot price of a commodity is higher than the forward price

A forward curve is a graph of forward rates all for the same maturity but with different forward periods.

Forward price - the fixed price at which a specified amount of a commodity, currency or security is to be delivered on a fixed date in the future.

Shipping is physical process of transporting goods and cargo. Virtually every product ever made, bought, or sold has been affected by shipping. Despite the many variables in shipped products and locations, there are only three basic types of shipments: land, air, and sea.

Oil tankers, also known as petroleum tankers, or tankers are ships designed for the bulk transport of oil. There are two basic types of oil tanker: the crude tanker and the product tanker. Crude tankers move large quantities of unrefined crude oil from its point of extraction to refineries. Product tankers, generally much smaller, are designed to move petrochemicals from refineries to points near consuming markets. Oil tankers are often classified by their size as well as their occupation. The size classes range from inland or coastal tankers of a few thousand long tons of deadweight (DWT) to the mammoth supertankers of 650,000 DWT.

A barge is a flat-bottomed boat, built mainly for river and canal transport of heavy goods. Most barges are not self-propelled and need to be moved by tugboats towing or towboats pushing them. Barges on canals (towed by draft animals on an adjacent towpath) contended with the railway in the early industrial revolution but were outcompeted in the carriage of high value items due to the higher speed, falling costs, and route flexibility of rail transport.