Russia's Kudrin says E.Siberian tax breaks to stay

Thu Jan 28, 2010 3:18pm EST
 
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By Gleb Bryanski

DAVOS, Switzerland (Reuters) - Russia will maintain its tax breaks for oil extracted from East Siberian fields but a government taskforce is reviewing the zero export duty and list of eligible fields, Finance Minister Alexei Kudrin said.

Russia granted numerous tax breaks to the oil industry last year to boost stagnating production, but the Finance Ministry has been considering whether to abolish or amend them because oil firms keep pressing for more.

In the long term, the Finance Ministry aims to replace the existing oil industry taxes -- mineral extraction tax and oil export duty -- with a uniform levy on excess profit. But Kudrin said the tax breaks policy would remain for now though the zero export duty could be changed depending on the field.

"On the whole the state policy regarding the East Siberian oil stays. We are ready to levy a different export duty (from the rest of the oil extracted in Russia)," Kudrin told reporters on the sidelines of the World Economic Forum.

"We just need to establish the rate and it will depend on the economics of a particular field."

Russia, the only country pumping more than 10 million barrels a day, returned to oil production growth in 2009 after suffering its first decline in a decade the previous year.

The zero export duty on East Siberia, whose beneficiaries include state-controlled sector leader Rosneft, TNK-BP and Surgutneftegaz, was designed to spur investment in hard-to-access regions.

Export duties on 13 East Siberian fields was lifted last June but in December the Energy Ministry extended the list of fields to 22 and adjusted the quality parameters of oil eligible for the zero duty. The tax breaks for the extended list came into effect on Jan 19.   Continued...