MOSCOW, Aug 22 (PRIME) -- Russia’s Finance Ministry may raise tax burden on the entire oil industry to offset 600 billion rubles of a budget revenue shortfall that will occur if Rosneft and Gazprom Neft get incentives for the Priobskoye field, Kommersant business daily reported Thursday citing sources familiar with the situation.
Rosneft is developing the northern part of the Priobskoye field, while Gazprom Neft is developing the southern part. The deposit is believed to be highly watered and its reserves are difficult to recover. Rosneft is asking for a 10-year mineral extraction tax (MET) deduction of 46 billion rubles a year, and Gazprom Neft is asking for a deduction of 13.5 billion rubles a year starting from 2020.
In order the make such compensation, the Finance Ministry is considering an additional increase of MET for oil and introduction of MET for associated petroleum gas, the daily said.
Oil companies believe that providing incentives for the Priobskoye field will significantly raise production, which will in turn give a positive effect for the budget. Rosneft First Vice President Pavel Fyodorov has estimated growth of production at the northern part of the field during the entire period of tax incentives at 70 million tonnes of oil and additional tax contributions to the budget at 660 billion rubles.
A spokesperson for the Finance Ministry said that providing tax incentives for the Priobskoye field is being studied.
(66.2630 rubles – U.S. $1)
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