Report: Russian energy ministry says MET raise to cut oil output

MOSCOW, Sep 25 (PRIME) -- An increase of mineral extraction tax (MET) for oil will push output 100 million tonnes down in three years, Russian oil companies told President Vladimir Putin in a letter on Thursday, according Energy Minister Alexander Novak said on Friday.

“If the MET is raised, drilling of some wells will become unprofitable, and many fields may be suspended. Our estimations show that in three years the output decrease may amount up to 100 million tonnes, and budget may lose much more money than it will lose from taking the MET,” Novak told Rossiya 24 television channel.

Investments in the energy industry may also halve by 600 billion rubles if the tax burden is increased, he added.

Previously, the Finance Ministry proposed setting a fixed ruble rate at the level of 2014 for calculation of deductions for the oil MET. The Economic Development Ministry, the Energy Ministry, and the Natural Resources and Environment Ministry stood against the idea. Under the finance authority estimate, Russia’s budget may receive 609 billion rubles of extra revenues in 2016, 525 billion rubles in 2017, and 476 billion rubles in 2018.

But the companies said in the letter that the contraction of output will mean a contracting revenue of 1.3 trillion rubles in the period.

(66.5151 rubles – U.S. $1)

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