President vetoes law changing oil royalty formula

President vetoes law changing oil royalty formula. President Viktor Yushchenko said on Friday that he vetoed a law passed by the Verkhovna Rada one week earlier (see our news from May 29) that, among other things, would have changed the size of the oil royalty and the formula for calculating the royalty adjustment coefficient. The President said that he would support an amended bill that addresses controversial questions such as the sale and rent of land. Vladimir Nesterenko: We expected the law would have difficulties passing Yushchenko’s desk over contentious land issues. If the Cabinet of Ministers does implement Yushchenko’s suggestions and he signs the law into force, the effective oil royalty would decrease, which would be positive for Ukrnafta (UNAF: SELL) and other producers, like JKX Oil & Gas (JKX LN: N/R) and Regal Petroleum (RPT LN: N/R). The only concern regarding the new formula is the reference oil price for calculating the adjustment coefficient – “the price of Urals oil on a London exchange”, as stated in the law – as Urals do not trade on any London Exchange. It does trade on NYMEX and Russian RTS, but in Europe only OTC.