The Ministry of Energy of the Russian Federation plans by the end of the year to assess how the new tax changes may affect oil production. “Now, I think that we are unlikely to be able to even give an estimate in terms of production volumes, given that our production is still artificially reduced (because of OPEC +),” Energy Minister Alexander Novak told reporters. “Much will depend on the current market situation and on the economic situation, including on the investment programs that companies will have. They, as you know, are now all the same within the framework of the pandemic and within the framework of reducing global demand, they have been reduced,” – he continued. “Therefore, here we will probably need to make a more thorough, in-depth assessment of our industry development forecasts, taking into account, among other things, changes in the tax burden and an increase in the efficiency of the industry,” the minister added. Also, according to him, it will be necessary to take into account the stimulating measures for the development in the Arctic, at certain fields. “A whole package of measures is being prepared for hard-to-recover deposits, so we will analyze this,” Novak specified. “I think that we will carry out such work by the end of the year,” he said.
As reported, the government approved a number of changes in the tax conditions for the oil industry, in particular, it canceled the export duty and mineral extraction tax exemptions for depleted fields, fields with special physical and technical characteristics and super-viscous oil, suggesting that they switch to the income-added tax regime (NDT ), which was generally tightened, in particular by limiting the carry forward of historical losses. According to Russian Deputy Prime Minister Yuri Borisov, LUKOIL (MCX: LKOH), Gazprom Neft (MCX: SIBN) and Tatneft (MCX: TATN) will suffer the most from these proposals.
During the discussion in the State Duma, the conditions for Tatneft and Gazprom Neft were softened – they were given the right to tax deductions for certain fields. The Ministry of Finance expects from the oil industry more than 200 billion rubles of additional receipts per year and believes that its initiatives will not lead to a significant decrease in production volumes.