« | »

Russians Give Oil Companies Tax Breaks

What do the Russians know that the Democrats and their media minions don’t?

From Russia’s Kommersant:

Oil Cos. May Get More Tax Breaks

Sep. 22, 2008

Measures being taken by the government to stabilize financial markets may result in oil companies getting all the tax reductions they asked for. Presidential aide Arkady Dvorkovich told Kommersant that a “principle decision” was made at a meeting with Russian President Dmitry Medvedev on Thursday to lower the tax burden on the oil industry. Discussion is ongoing bout whether the tax on mineral use or the export duty will be reduced. The changes may be formulated by the end of the year and go into force in 2009.

The first set of industry tax breaks, which also go into effect next year, raises the mineral use tax exemption on a barrel of oil from $9 to $15 and will save the oil companies up to 100 billion rubles per year. The oil companies have repeated said in recent years that it will take investments of 400 billion rubles per year in the industry to overcome falling production rates. The Energy Ministry predicts that oil production will fall by 1 percent this year compared to last and that the West Siberia – Pacific Ocean pipeline now under construction will not have sufficient supplies.

At the beginning of the month, the Deputy Energy Minister Stanislav Svetlitsky announced that the ministry has prepared a package of proposals to lower the tax burden on the oil industry by 400 billion rubles. Those proposals include raising the tax exemption on a barrel of oil from $15 to $25, increasing the “amortization premium” from 10 percent to 30 percent and lowering excise taxes on petroleum products. There is also a proposal to set export duties on petroleum products at 52-54 percent of the duty on oil to encourage refining within the country. The export duty on oil will go down from $485.80 to $372.20 per ton on October 1, which will save companies 140 billion rubles by the end of the year.

How is it that quasi-Communists understand the way markets work better than the so-called capitalists?

This article was posted by Steve on Monday, September 22nd, 2008. Comments are currently closed.

One Response to “Russians Give Oil Companies Tax Breaks”

  1. Steve says:

    More Gazprom news from Kommersant:

    Gazprom Joint Venture in Bolivia

    September 22, 2008

    Gazprom will form its first joint venture in South America with the Bolivian Yacimientos Petroliferos Fiscales Bolivianos and the French company Total for the exploration and production of natural gas in the southeast of Bolivia. Bolivian authorities are promising Gazprom and Total 49 percent of the proceeds from the new company. Other foreigners working in the country only have received only 18 percent of the income from gas sales since President Evo Morales came to power in 2005. In exchange, Gazprom and Total will invest $4.5 billion in the project and will own 24.5 percent in it. The project is expected to raise the country’s annual gas production from 8.5 billion cu. m. to 18 billion cu. m.
    Gazprom and YFPB signed a memorandum of understanding in February 2007. Under that document, Gazprom will also be able to participate in the construction of gas liquefaction plants and distribution networks. Gazprom has chosen Sunchal, Acero and Carohuaicho blocs in the Subandino Sur basin with reserves of 300 billion cu. m.

    The generous terms for the new joint venture are probably a response to political instability in Bolivia. Last month, Morales announced a referendum would be held in the country on dividing income to favor poor regions of the country more strongly. The prosperous Santa Cruz, Beni and Pando Districts, where the gas fields are located, quickly announced their own referendum on autonomy. Gazprom has no agreements with local authorities there. The project will not be highly profitable. Gas at the Bolivian-Argentinean border costs about half as much as it does at the Russian-EU border.


« Front Page | To Top
« | »