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State regulation in the oil and gas sector in 2011 and prospects for 2012

State regulation in the oil and gas sector in 2011 and prospects for 2012

The year 2011 turned out to be rather contradictory for the oil and gas industry. On one side, preliminary results of basic parameters seem quite satisfactory. On the other side, the depletion of oil production growth potential is becoming more obvious.

Prime Minister Vladimir Putin several times mentioned that the oil industry reached its peak. This was described as an ordinary event, although in reality it reflects recognition of strategic mistakes once made.

In 2011 the trend of gradual shift in investment activities of Russian companies towards upstream-projects abroad became vivid. The problem of offsetting declining production in Western Siberia is becoming more apparent.

Eastern Siberian and shelf projects may fail to comply with forecasted parameters. The state is carried away by creation of the export infrastructure as if ignoring problems accumulating in the production segment.

Meanwhile, the government’s general mood of dealing with the state budget’s dependence on exports of hydrocarbons remains, while the demand for financial resources for state authorities is rising amid a sharply deteriorated political situation. These resources can be provided only by the oil and gas industry. Being trapped it currently urgently needs investments and state regulation incentives. Yet, the sector is needed as a cash cow only.

A new report elaborates on the following issues:

  • Production results of the oil and gas industry

    • Dynamics of oil and gas production
    • Main changes in export policies
    • Situation in geological prospecting
  • Taxation

    • Analysis of the new 60-66-90 system
    • Continuation of the “patchwork” fiscal policy
  • Struggle for assets

    • One of the most important consequences of changes in the political situation will be sharpening of struggle for undistributed assets, including deposits in the undistributed reserve
  • Domestic fuel market

    • The year has been characterized by constant interruption of fuel supplies and growth in prices of crude and processed products
    • Main reasons and real tasks of the state and large companies
  • Medium-term forecast of developments

    taking into account the future formation of a new system of state regulation of the sector and growing state problems

The contents of the report:

Introduction 3
Chapter 1. Preliminary Production Results 5
Chapter 2. Domestic Fuel Market 21
  2.1. ÂReasons for Petrol Deficit and Growth in Prices of Oil Products 21
  2.2. Domestic Gas Market: Struggle for Equal Profitability 32
Chapter 3. Taxation Regulation of the Sector 36
Chapter 4. Struggle for Production 51
Chapter 5. Changes in Export Policies 66
Chapter 6. Prospects of Developments 73
Date of issue: January 23, 2012


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Regulation of Oil and Gas Sector in 2019 and Prospects for 2020
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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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