Russian Prime Minister Vladimir Putin has reportedly ordered a prompt overhaul of the tax regime for the country’s oil industry.
Russia has been dragging its heels in working out tax incentives to maintain production from its key oil and gas sector, which provided 50% of state budget revenues in 2010.
“I believe that the debate over taxes is unduly delayed, and it prevents companies from building long-term development strategies and plans, so I am giving orders to study as quickly as possible the question of taxation and to present likely options to the government commission on the fuel and energy complex for consideration,” Putin told a St Petersburg conference on the performance of the Russian energy sector in 2010 and the challenges ahead.
The Energy Ministry has said the Soviet-era oilfields of West Siberia, which provide the lion’s share of Russian production, must receive tax incentives on crude extraction similar to those given to new fields in East Siberia to boost output through the use of advanced drilling methods.
“We hit 505 million tonnes per year (10.1 million barrels per day) in 2010,” Putin said. “This is the optimum volume that covers domestic and export demand, and a level that we must hold in the coming years.”
He said key issues that needed to be addressed to establish an effective taxation model included a tax regime for new fields, for depleted and low flow rate wells, the differentiation of the subsoil resources tax and equalisation of duties on light and heavy oil, according to an Itar-Tass report.
This work, he said, should be completed by this spring.
