The measures would allow oil companies to save up to $4bn annually by raising the tax-free threshold for the mineral extraction tax from $9 per barrel to $15.
Sergei Shatalov, deputy finance minister, said his ministry was also proposing seven-year tax holidays for development of remote oil fields in Yamal and the Arctic region of Timan Pechora.
But analysts said far greater cuts could be in the pipeline and would have to be implemented if Russia’s oil industry was to put flagging production back on a growth track. The minister for natural resources has warned that output could this year suffer its first decline in a decade, prompting fears over Russia’s role as an international supplier. Output growth has averaged 2.5 per cent since 2005.
Industry executives have blamed Russia’s stiff tax regime, in which the government takes about 80 per cent of revenues, 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. Mr Weafer warned oil stocks would fall sharply if the government failed to agree the cuts.
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.
