10/05/2015, 00.00
Send to a friend

Moscow ready to tax oil companies and meet with OPEC and non-OPEC members

Last year, Russia refused to follow Saudi Arabia and cut output to undermine US shale oil. This year, its Finance Ministry wants to increase tax and export duties to meet financial shortfall, raising the ire of the Finance Ministry.

Moscow (AsiaNews/Agencies) – Russia, the world's top oil producer, is ready to meet with OPEC and non-OPEC oil producers to discuss the situation on global oil markets if a meeting was called, its energy minister said on Saturday at the International Investment Forum Sochi-2105.

A separate meeting between Russian and Saudi officials was being planned for the end of October, to discuss energy issues and some other projects, Russian Energy Minister Alexander Novak also said.

On Friday, Novak's colleague, Russian First Deputy Energy Minister Alexei Texler, had said he was not aware of such meetings and that Russia would stick to its plans not to cooperate with the Organization of the Petroleum Exporting Countries (OPEC).

Russia had refused to cooperate with OPEC last November to defend its market share. Lack of storage and harsh weather conditions are an added factor that limit Moscow's ability to cut its exports, Deputy Prime Minister Arkady Dvorkovich.

However, Russia is currently hard pressed to meet its budgetary targets, which depend heavily on oil revenues. For this reason, it was not prepared to cut back output to join the Saudis to undermine US shale oil.

Likewise, cash-strapped OPEC-member Venezuela has for months been pushing for an emergency OPEC meeting with Russia to stem the tumble in prices.

OPEC next plans to meet in December for a regular review in production quotas, unchanged since last year.

"If such consultations are to happen we are ready to take part," Russian Energy Minister Alexander Novak said. He did not say when and if such a meeting might take place.

Government and oil companies at odds

Oil has become a major source of tensions within Russian government circles.

From Sochi, Novak tried to tackle the thorny issue of the proposal by the Finance Ministry to change oil taxation in a way that would bring in around 600 billion rubles (US$ 9 billion) in additional revenues for the next budget.

Novak noted that  proposals on taxation and export duties for the oil industry from Russia's Finance Ministry could lead to Russia losing between 7 to 10 million tons in output next year.

Facing protests from the oil industry, the Finance Ministry proposed the softer measure of keeping Russia's oil export duty mechanism unchanged next year — a move that could bring around 200 billion rubles to the budget — instead of going through with an agreed cut.

The chief executive of Russia's top oil company Rosneft, Igor Sechin, addressing Prime Minister Dmitry Medvedev in Sochi on Friday, called for finding alternative sources to help the budget.

For critics, new fiscal measures could result in investments being slashed, with some saying output could end up cut as well.

With the Kremlin unhappy with the way state oil companies are managed, the Finance Ministry is looking for ways to increase revenue.

However, reductions in output would not automatically follow, it said. "From our point of view, the production should not fall as all investments for 2016 were already made," Ilya Trunin, the head of the Taxation Department in the Finance Ministry, told reporters.

Send to a friend
Printable version
See also
Oil prices drop, amid tug of war between OPEC and the US. But markets celebrate
Oil prices plunge elates some, causes fear in others
Oil price war aimed at non-OPEC countries
Saudi Arabia not to increase production more than forecast
OPEC gives green light to production cut. Market prices for crude oil rise
28/09/2016 09:22


Subscribe to Asia News updates or change your preferences

Subscribe now
“L’Asia: ecco il nostro comune compito per il terzo millennio!” - Giovanni Paolo II, da “Alzatevi, andiamo”