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Russian oils: Ministry of Energy proposes differentiated MET reliefs based on production layers

 
02.08.2012

According to Vedomosti, the Ministry of Energy has suggested introducing differentiated MET rates for hard-to-recover oil. The proposal assumes that specific discounted MET rates would apply to oil produced from specific production layers. The initiative is to be discussed by the government.

Currently, not all wells have the equipment necessary to measure the amount of crude oil produced (on average, accounting occurs on well pads, rather than on specific wells). Moreover, some fields produce from multiple production layers. As a result, it would be quite hard to implement the aforementioned methodology. However, the plan to create a financial incentive to increase crude oil production is positive for sentiment and again supports our view that the oil sector is subject to tax subsidies rather than tax hikes.

Dmitry Loukashov, Alexander Kirevnin, Ekaterina Rodina, Elena Kopylova, Mikhail Zarkhi
VTB Capital analyst

Tags:
Russia, oil

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