Russia redesigns fiscal policy to boost oil E&P

摘要

Second of the two part article addressing the challenges facing Russia's oil and gas industry is presented. Since 2004, private Russian oil and gas companies' exploration expenses, in nominal terms, increased 4.4 times, reaching 165 billion rubles in 2008. Despite this major inflation of costs -- more than 30% in 2008 -- actual work accomplished remained almost flat. This is explained partly by the rapid decline in the price of crude oil and the expansion of the global financial crisis. Financial crises hit Russian oil producers heavily in fourth-quarter 2008 due to oil price declines and an export duty lag. This critical situation prompted the government to revise its rules for export duty calculation by decreasing the monitoring period from 2 months to 1 month and moving it closer to the accounting period. The new tax relief should help the industry to overcome such crises in 2009.