The Ministry of Finance and Exxon agreed to resolve a dispute about $637 million without a trial

Court hearing in Stockholm on a tax dispute between Exxon and Russia in the framework of the project “Sakhalin-1” is delayed, because the parties agreed to settle differences out of court, told reporters the representative of the Ministry of Finance. According to him arbitration proceedings pending for several months. Hearings on the case were scheduled for 24-28 April, reported the Ministry of Finance. The representative of ExxonMobil has not yet responded to questions .

In early 2015 ExxonNeftagas (“daughter” ExxonMobil, the operator “Sakhalin-1”) has demanded from Russia to return approximately $500 million of income tax under the project “Sakhalin-1”. The company felt that I overpaid this amount since 2009, when the rate of profit tax in Russia decreased to 20%, and ExxonMobil were taxed at 35% profit, this rate is set for the PSA “Sakhalin-1”. To negotiate with Russia, the company failed to: the Ministry of Finance have repeatedly pointed out that the claim of ExxonMobil based on selective interpretation of the agreement on production section in isolation from the other provisions and economic logic. In case of victory ExxonMobil in court, throughout the duration of the project Russia’s losses could reach $16 billion.

Failing to negotiate with the Finance Ministry in March 2015 ExxonNeftagas appealed to the Stockholm arbitration. The Ministry of Finance after submission of the claim stated that Russia is convinced of the correctness and are ready to defend the position on this issue in court.

The situation changed after March 9, the new head of ExxonMobil Darren woods met with President Vladimir Putin. Tax dispute on “Sakhalin-1” it is not discussed, said the President’s representative, Dmitry Peskov. But the compromise was discussed at the meeting of the woods with energy Minister Alexander Novak and head of “Rosneft” Igor Sechin (Rosneft owns 20% in “Sakhalin-1”) on the same day, told sources .

In late March, the Finance Ministry said that Russia is ready for the extrajudicial settlement of the dispute with ExxonMobil on taxes of the project “Sakhalin-1” for a win-win for the parties. The amount of claims increased from the time of filing a claim for $121 million to $637 million