Russian oil taxes are the main deterrent to investments in the oil sector. We continue to believe that the Russian oil sector represents a good investment opportunity, despite investors’ appetite being dented by the perception that revenue-based Russian oil taxation is insufferably heavy. We highlight one perhaps surprisingly positive effect that such a taxation approach has had in Russian circumstances: efficiency. Blessing in disguise. High, revenue-based tax coupled with low corporate tax created a situation in which oil companies had an incentive to invest in efficiency. This was because, due to the low income tax, nearly every dollar of efficiency gain went directly to the bottom line. The flip side of the coin was that this structure meant there was little incentive to invest in production. Nevertheless, these specific circumstances boosted efficiency, competitiveness and transparency and so the Russian oil industry now differs dramatically from many other Russian sectors. Investment governance is the key. We therefore contend that, contrary to the common view, the taxation structure has actually created value for the Russian oil sector at this stage of its development.