Insight

Fiscal systems for oil in Russia

21 August 2015

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21 August 2015

Fiscal systems for oil in Russia

Report summary

The Russian government has recently backed a profit-based oil taxation initiative but the bill still needs to be passed. Low oil prices have heated up the taxation debate between the government and the industry. Current taxation is suitable for maintaining production at low-cost fields. 10 oil tax incentives have been introduced since 2007 for higher cost projects. Profit-based taxation could become a long-term solution if a suitable mechanism for tax deductible capital expenses is established.

Executive Summary
- Russian standard oil taxation in brief
- What is driving oil tax changes?
- Analysis of existing oil tax incentives
  - Regional incentives
  - Hard-to-recover oil incentives
  - Offshore incentives
- What’s next for Russian oil taxation

Tables and charts

This report includes 8 images and tables including:

Pre-tax cash flow split* for a sample mature field under standard taxation in 2015
Marginal and effective oil MET and ED rates in 2015
Government share* of sample projects under standard taxation in 2015

Cost sensitivity of government share* under standard taxation in 2015, at US$50/bbl
Oil tax incentives timeline
Application of oil tax incentives
Reduced MET and ED shown as a proportion of standard tax terms for various oil tax incentives, at US$50/bbl
Government share comparison under various oil tax incentives in 2015, at US$50/bbl