Gazprom Neft said Russian taxes are hindering ventures with international oil companies and are the main obstacle for its expansion at home and abroad. “The main problem is the tax regime,” Alexander Pankratov, head of business development at the St Petersburg- based company, said yesterday in an interview at the CeraWeek conference organised by IHS Cambridge Energy Research Associates in Houston. Gazprom Neft’s plans to double output to 2 million barrels per day by 2020 depend on gaining foreign partners at home and access to deposits abroad. Such projects may hinge on tax incentives that the government is reviewing this month, Bloomberg reported.
The Finance Ministry looks to reinstate export duties on certain oilfields in eastern Siberia, a region Gazprom Neft is targeting for expansion, after Russia ran its first budget deficit in a decade last year. “I can’t see why a major company would come and put in billions of dollars in a project just to have it frozen by a slow rate of return,” Artem Konchin, an oil and gas analyst at UniCredit, said today by telephone from Moscow. Projects in Russia’s offshore and eastern Siberia can cost three times more to develop than deposits in western Siberia, Russia’s main producing region, Konchin said.
"We’re looking for partners for different assets but it’s all in discussions right now, for new assets, for eastern Siberia,” Pankratov said. The company wants to attract investment and share risk in the little-developed region, he said. The Finance Ministry’s attempt to roll back eastern Siberian tax breaks has led Gazprom Neft to question whether to acquire resources there, Pankratov said. TNK-BP and Rosneft, who are developing oilfields in the region, have said higher taxes will slow projects in the region. The Energy Ministry is pushing to preserve exemptions to boost output.
Russia has the capacity to increase output by about 5% this year, Pankratov said. The country passed Saudi Arabia to become the world’s largest oil producer last year, averaging 9.93 million bpd last year, according to the Energy Ministry’s CDU-TEK data unit. Gazprom Neft seeks to raise oil output outside of Russia to 10% of its total, or 200,000 bpd, in 10 years from about 14,000 bpd abroad now, he said. The company is “in constant talks” with potential foreign partners, seeking access to assets abroad in exchange for cooperation on tapping Russian resources, Pankratov said. Foreign companies are interested in Gazprom Neft because of its state ownership and access to resources, he said.
Gazprom expects to close a deal this month to join Eni and Enel in developing Russian gas deposits. Following that deal, Gazprom plans to buy into the Eni-led Elephant oilfield in Libya. The oil company expects to get licences to as much as 100 million tonnes of oil equivalent from Gazprom this year, which may include Libyan resources, Pankratov said. The executive said the state will also probably auction more licences this year after holding back in recent years. “We expect fierce competition from other Russian oil companies so it won’t be an easy task to get them at the right price,” Pankratov said.
