“The arbitration case hearing is set to April 24-28. The subject matter of the dispute is interpretation of a provision on the income tax in the Sakhalin-1 project production sharing agreement. The claim amounts to $637 mln. The Russian Federation is ready for out-of-court settlement of the dispute on conditions mutually beneficial for the parties and the claimant was repeatedly informed to that effect,” the Finance Ministry said.
In April 2015, ExxonMobil lodged a claim to the Stockholm arbitration requiring changes to the interpretation of the Sakhalin-1 project Production-Sharing Agreement (PSA) paragraph on taxes. The company believes its subsidiary Exxon Neftegaz Limited overpaid approximately $500 mln worth of profit taxes within Sakhalin-1. At the time of the PSA signing in the mid-1990s profit tax of 35% was imposed in Russia while in 2009 it was reduced to 20%, but ExxonMobil continued to pay at the earlier level of 35%. Russia believes that PSA terms are not subject to change within its period of validity..
The Stockholm arbitration court formed the panel consisting of three judges to settle the dispute. Russia said it is preparing a trade-off proposal and looks forward to out-of-court settlement.