Investment in Russian oil sector may fall by 2 tln rbl till 2035

MOSCOW, Oct 3 (PRIME) -- Investment in the Russian oil industry may fall by 2.3 trillion rubles until 2035 as compared with the level of 2018 if the taxation system is not changed, the Energy Ministry said in a statement presented on Thursday by Deputy Minister Pavel Sorokin during the Russian Energy Week.

“The current configuration of the taxation system makes contraction of output inevitable, which will lead to contraction in taxes and investment,” the presentation read, adding that output may fall to 339.1 million tonnes in 2035 from 555.8 million tonnes in 2018 with investment falling by 2.3 trillion rubles without stimulation measures.

“Of course, companies adapt to harsh conditions, and we saw examples of that in 2014,” Sorokin said.

“In the U.S., the cost of shale oil production fell by almost two times thanks to higher efficiency, as the majority of ‘horizontal’ productions switched into ‘vertical’ ones, but largely thanks to a reduction in the cost of works of servicing companies. The servicing companies are still unable to recover from the shock of 2014–2016, but it helped reduce production costs,” he said.

Still, if nothing changes, both output and investment will fall, he said.

(65.4399 rubles – U.S. $1)

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