Page 10 - FSUOGM Week 25 2021

FSUOGM COMMENTARY FSUOGM

investment programme, Yarega-2, was initiated to 52,000 bpd in 2020. As with Yaregskoye, the
in 2018. It was planned to last for four years and Permian-Carboniferous deposits of Usinskoye
expand the field’s capacity to 3.5mn tonnes per were not affected by last year’s crisis and were
year (tpy), or about 65,000 barrels per day (bpd). excluded from production curtailments. Daily
The investment programmes yielded great output increased marginally in the first quar-
results in terms of production: oil output at the ter this year from the 2020 average, although it
Yaregskoye field, after period of stagnation, more slipped by 5,000 bpd from the preceding quarter.
than quadrupled to 44,000 bpd from 10,000 bpd Before the tax reliefs were abolished,
when the export duty reliefs were introduced. high-viscous and extra-viscous oil were subject
The field was excluded from last year’s OPEC+ to different tax rules. For extra-viscous oil (oil
production cuts and continued to ramp up out- sands), the mineral extraction tax (MET) was
put in the first quarter of this year. zero, while export duty rates were discounted by
The Usinskoye field has a complex structure 90% of the base rate. In a $60 per barrel Brent
with multiple layers containing different types price scenario, the total tax burden was only 2%.
of oil. The Permian-Carboniferous deposits are For high-viscous oil (between 200 and 10,000
the main source of high-viscous oil (710 mPa·s) mPa·s), the MET rate was reduced by 50%, no
and are developed using thermal recovery meth- export duty reliefs were provided, and the gross
ods. The field came on stream in 1973, viscous tax burden was below 40% in a $60-per-barrel
oil production began in 1977, the field started price environment. When the tax reliefs were
to decline in the mid-1980s and production had abolished on January 1, 2021, the tax burden for
stabilised at 40,000 bpd by 2007. The almost-zero oil sands and high-viscous oil was levelled off at
tax burden was an impetus for the infill drilling 62%.
programmes and further infrastructure devel- Figure 3 shows the cash flow profiles of the
opment on the field. This translated into viscous Yaregskoye and Usinskoye fields before and after
oil production growth from 37,000 bpd in 2013 the tax changes. Both projects were on track to

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