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New Legal and Fiscal Procedures in the Oil and Gas Industry

New Legal and Fiscal Procedures in the Oil and Gas Industry

There are rather contradictory developments in the Russian oil and gas industry. However, this is not surprising: the role this sector is to play in the current and most importantly in the future structure of the Russian economy has not been finally defined yet. On one side, on the eve of the elections the oil and gas sector traditionally has to play the role of a cash cow. On the other side, the danger of decline in production is becoming more than real and tax incentives for investments in green fields are becoming more important.

Besides, there are active preparations for the introduction of changes in the legislative framework of the Russian oil and gas sector. A new bill on oil is to be soon submitted to the State Duma; the document is to become almost a new oil constitution. The struggle of main clans around these issues is obviously getting tougher, especially taking into account the unavoidable transformation of the political system after the elections. Everybody is rushing to create new instruments to preserve and even increase influence after the elections regardless of who will become the president and how the future government composition will look like.

The new report of the National Energy Security Fund provides a detailed analysis of the following aspects:

  • Analysis of the general situation in the sphere of taxation of the oil and gas sector

    • Real burden on the oil and gas industry
    • Possibilities for development of new deposits under the current taxation system
    • Stories by oil producers about the tax burden: truth and fiction
    • Dynamic of net profits of companies and the share of fiscal payments in revenues
    • Correlation of profits and capital expenditures
    • Real objectives of the state in taxing the sector
  • New fiscal policy of the state

    • The new 60-66 taxation system: interests of companies and administrative clans
    • The future of the minerals production tax and prospects of introduction of the tax on additional revenues
    • Excise policy
  • Taxation preferences

    • Replacing general taxation rules with numerous private taxation procedures
    • Taxation demands of political and administrative clans, prospects of satisfying such demands
  • Creation of new legal framework of functioning of the sector

    • The bill on oil. Improvement of the shelf legislation

    The contents of the report:

    Introduction. 3
    Chapter 1.Real Level of Tax Burden on Oil and Gas Companies, Link Between Fiscal Policies and Their Desire to Invest 4
    Chapter 2.Main Lines of Transforming Fiscal Procedures in Russia’s FES 27
    2.1.Oil Sector 27
    2.2.Gas Sector 35
    Chapter 3.Sharpening of Struggle for Private Tax Preferences 40
    Chapter 4.Creation of New Legal Frames for the Sector’s Functioning 49
    Chapter 5.Prospects of Developments 62
    Date of issue April 12th, 2011

If you are interested to obtain please contact » Elena Kim

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Analytical series “The Fuel and Energy Complex of Russia”:

New OPEC+ Deal and Future of Oil Business in Russia
Gazprom on the background of external and internal challenges
Regulation of Oil and Gas Sector in 2019 and Prospects for 2020
Fiscal Policy on Oil and Gas Sector: Revised as Often as Wikipedia
The tax system in the oil and gas sector continues to undergo radical changes. The beginning of 2019 saw the introduction of a new tax regime: additional income tax. That experiment was supposed to start migration of the oil industry to an innovative principle of taxation: on profit, not revenue. It seemed that a new main road was found. In the same year, however, the Finance Ministry launched an overt offensive against AIT. The fear of loss of government revenue now is more powerful than the threat of causing oil production to collapse in the medium term because of a tax system that does not stimulate investment. The Finance Ministry would strongly prefer to speed up the tax manoeuvre completion that earns the state budget additional money. Oil and gas companies respond to this with individual lobbying, attempting to wangle special treatment for their projects.
Ukrainian Gas Hub: Climax at Hand
The “zero hour” comes in less than a month: the contracts for gas transit through Ukraine and for supplying Russian gas to the country terminate at 10 am on 1 January. Meanwhile, Gazprom and Naftogaz are very far from looking for a mutually acceptable solution. The entire European gas business is watching intently the negotiations between Russia and Ukraine. Everyone is waiting for a new “gas war”: the January 2009 events proved to be a serious test both to European consumers and to Gazprom as a supplier. Is there still a chance of agreement? If there is not, will Gazprom cope with its obligations to deliver gas to Europe? Is Russia bluffing as it assures that the new infrastructure and gas in underground storage facilities will enable it to get by without Ukrainian transit even as soon as this winter? What will happen to Ukraine itself at the beginning of 2020?

All reports for: 2015 , 14 , 13 , 12 , 11 , 10 , 09 , 08 , 07

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