Russia's LUKOIL to seek tax breaks for new fields

Thu Jan 28, 2010 8:15am EST
 
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DAVOS, Switzerland (Reuters) - Russia's No. 2 oil firm LUKOIL (LKOH.MM: Quote), which has almost no assets in East Siberia, has urged the government to extend tax breaks to new areas rather than end existing benefits for giant East Siberian deposits.

Russia granted numerous tax breaks to the oil industry last year to boost stagnating production, but the Finance Ministry wants to abolish the breaks fearing it cannot resist pressure from oil firms for more.

"We believe that the Russian government should support the oil industry, especially exploration in new provinces -- in East Siberia and North Caspian," CEO Vagit Alekperov told Reuters on the sidelines of the World Economic Forum in Davos.

"We do not need new breaks but the existing ones should be extended to new oil provinces."

The Finance Ministry wants to replace the existing oil industry taxes -- mineral extraction tax and oil export duty -- with a uniform levy on excess profit. Alekperov opposes the change.

"Today, the government's policy on creating stimulus for the oil industry is very balanced," he said, adding that LUKOIL was also lobbying for tax breaks for smaller deposits with reserves of between one and three million tons.

(Writing by Gleb Bryanski, Editing by Lin Noueihed)