RUSSIA'S Lukoil and Tatneft have revealed the heavy hit from the cancellation of tax privileges for capital intensive greenfield projects rubber-stamped by authorities late last year to help increase budget revenues. Lukoil has warned First Deputy Prime Minister Andrey Bel-ousov that it may idle its Kor-chagina oilfield in the Caspian Sea unless the government takes measures to boost economic returns from the asset. Korchagina is the first oilfield Lukoil commissioned at its large block in the Caspian, at an estimated cost of 140 billion roubles ($1.9 billion). The block contains several other larger assets that Lukoil intends to bring online in the next few years to form a major offshore oil-producing cluster. Moscow business daily Kom-mersant quoted a recent letter from Lukoil president Vagit Alekperov to Belousov as saying that the removal of tax concessions for Korchagina would make oil production at the asset economically unattractive "in the mid-term".
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