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Russia moves closer to tax relief for offshore hydrocarbons
September 11, 2013 / 3:47 PM / 4 years ago

Russia moves closer to tax relief for offshore hydrocarbons

* Russian Duma passes offshore tax relief

* Russia wants to maintain current oil output above 10 mbpd

* Russia recently approved tax relief for tight oil

MOSCOW, Sept 11 (Reuters) - Russian lawmakers approved tax relief for offshore fields containing hydrocarbons essential for boosting production in the remote regions of the world’s top energy producer, a representative for a Duma committee told Reuters on Wednesday.

Russia is offering new tax relief to support current production and unlock new reserves, as it is now pumping oil close to its capacity of above 10 million barrels per day (bpd) mostly from depleting West Siberia deposits.

However, its untapped undersea reserves are estimated at over 100 billion tonnes of oil equivalent, sufficient for roughly 25 years of the world’s current crude consumption, if a means can be found to unlock them.

On Wednesday, Russia’s Lower House of Parliament - or Duma - approved the document that provides lower mineral extraction tax along with other relief for new hydrocarbon offshore fields launched after 2016.

Andrey Polischuk, an analyst with Raiffeisen bank, welcomed the new legislation, which should boost offshore field development.

“The new system’s advantage is that it doesn’t split tax breaks field by field, but is applicable by regions. All the major players will benefit - Rosneft, Gazprom, joint ventures with foreign partners,” he said.

Russian state oil giant Rosneft has recently joined up with Western majors such as ExxonMobil, Statoil or Eni to develop offshore, as it can provide access to vast reserves while foreigners bring the advanced technology.

Russia recently offered tax breaks for tight oil, lying largely in West Siberia under existing fields, as Moscow hopes to at least maintain its current crude production over the next decade.

The Upper House of Parliament and the president now need to approve the document, which the Finance Ministry plans to come into force from next year. (Reporting by Katya Golubkova; editing by James Jukwey)

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