Putin Cuts Taxes To Boost Oil Industry

Russia’s government took its first steps on Monday towards $4bn of tax cuts to boost investment in the oil industry. Vladimir Putin, the prime minister, told a cabinet session the proposed cuts to the mineral extraction tax would be fast-tracked for parliamentary review this week in order to increase oil production and boost refining. [snip]

Industry executives have blamed Russia’s tax regime for putting the brakes on investment just as fields in western Siberia start to peter out and additional funds are needed to tap more remote regions.

Mr Weafer said a second phase of tax cuts toadjust for inflation and the rouble’s appreciation was in the pipeline and could free up as much as $20bn for the industry, while a further $5bn to $10bn could come from changes to export tariffs.

Analysts said the further cuts were being discussed by the government and the oil lobby and could be forwarded to parliament in late June, in time to amend next year’s budget.

With oil prices at record levels of up to $130, Russia’s government could afford to give money back to the oil industry, Mr Weafer said. An average oil price of $110 per barrel this year would, he estimated, give the government $60bn to $70bn more than the revenues it was currently projecting.

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