BRUSSELS Nov 8 A new, profit-based tax regime
for the Russian oil industry is critical to support the use of
modern, high-cost technologies and maintain oil production,
Leonid Fedun, a vice president at oil producer Lukoil
, said on Tuesday.
"The biggest issue we are facing is the fiscal environment
in Russia," he said at a conference in Brussels to present the
company's view on future trends in energy markets.
The Russian government has debated changes in oil industry
taxation for years as it tries to find a balance between budget
needs and sustainable oil production, which together with gas
generates around 40 percent of state revenues.
The current tax is based on production and exports.
Companies have long been lobbying for profit-based taxation,
saying it would spur production while better reflecting
exploration costs and risks.
The energy ministry has already proposed a profit-based tax
regime, which is expected to be introduced in some pilot
projects, possibly next year.
Russian companies face declining production at depleted
oilfields in Western Siberia, the country's oil industry
heartland. They have increasingly used new methods of oil
extraction, such as hydraulic fracturing and horizontal
drilling, to sustain crude output.
"The usage of additional methods of oil extraction ... is
very expensive, and with the current oil price and under the
current tax system it doesn't work," Fedun told Reuters in an
Russia has been pumping oil at record-high levels above 11
million barrels per day despite a preliminary agreement to
freeze output jointly with other leading producers such as Saudi
Arabia to prop up weak prices.
Fedun said the country had reached its maximum capacity.
"We believe that Russia has reached its peak production at
10-11 million barrels per day. In our estimate, this is peak
production in Russia. ... Further production dynamics will
depend on the fiscal policy in Russia," he said.
(Reporting by Alissa de Carbonnel; Writing by Vladimir
Soldatkin; Editing by Dale Hudson)