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Russia's oil export duty on fuel oil could increase by over 50 percent within the next two months, according to deputy minister Alexey Likhachyov.

Speaking to Reuters, Likhachyov is reported to have said that the Ecomony Ministry wanted to "restore justice" and tax fuel oil at the same rate as gasoline and naphtha.

If the proposed tax hike is implemented, the export duty on fuel oil would skyrocket $143 per tonne, or 53.5 percent, to $414.6 per tonne, up from $271.4 per tonne in March.

Local trading sources say that the proposed increase could lead to a collapse in Russia's refining industry. The export fee on gasoline and naphtha was already set at 90 percent of crude oil duty from last May, and if the same is done with fuel oil, it is estimated that the current average refining margin of $15 per barrel would shrink to zero.

To make matters worse for refiners, it has even been envisaged that Russia's crude oil and fuel oil could be subject to equal export duty by 2015.

Oil experts argue that the rise in export duty would be short-sighted as it could lead to investment plans to modernise the country's refining plants being shelved, and have a negative effect on the future earning potential of the country's oil industry.

Last year, Russia introduced a new crude oil and oil product export duty formula in order to boost production of oil and high-grade refined products. It reduced the crude duty to 60 percent and established most oil product duties at 66 percent of the duty on crude.

The latest proposed export duty hike on fuel oil is said to be a result of the recent increase in the price of crude. "Our minister proposed to hike the fee due to the market situation, including the rise in oil prices," a source at the Economy Ministry is quoted as saying.

The proposed duty increase also follows a rise in Russia's budget deficit to 245.3 billion roubles ($8.3 billion) between January and February 2012. The deficit was 3 percent of gross domestic product, compared with an expected 1.5 percent for the whole of 2012.

Bunkering

The Russian marine fuel industry would also be affected by a large hike in export duty on fuel oil. Under current port regulations, vessels taking on bunker fuel without carrying out cargo operations are forced to pay either the fuel oil export duty for purchases of intermediate fuel oil such as 380-centistoke (cst) and 180-cst, or the duty on light refined fuels for refuelling with distillate grades such as marine diesel oil (MDO) and marine gas oil (MGO).