The outcome of this debate will shape the future of Russian oil industry.More expensive frontier areas and hard-to-recover reserves are becoming the main drivers of production growth in Russia. Russia currently applies a revenue-based tax system and without tax incentives these projects may be uneconomic. Since 2007, 10 major tax incentives have been introduced but this approach lacks flexibility and does not promote dynamism in the oil industry. Low oil prices have heated up the debate between the government and the industry regarding profit-based taxation. The Ministry of Energy (MinEnergo) and the Ministry of Finance (MinFin) have proposed two different versions of new profit-based taxation.