Page 18 - FSUOGM Week 44

FSUOGM POLICY FSUOGM

Lukoil seeks oil tax relief

at Yaregskoye

RUSSIA RUSSIA'S second-largest oil producer Lukoil high-viscous oil (HVO) such as that produced
has requested the government to grant its Yar- at the Yaregskoye field," VTBC reminds, but it is
Lukoil was among the egskoye oilfield mineral extraction tax (MET) unclear if the tax break will be provided.
companies worst hit by relief, starting 2021 and linked to the compa- "Lukoil’s appeal for HVO tax relief is the first
the tax reforms. ny’s investment in production, Vedomosti daily such request (but not the last) as companies
reports. come to grips with the new tax regime and as the
Lukoil CEO Vagit Alekperov most recently government balances revenue maximisation
railed against the oil sector tax reforms, warning with the health of the Russian oil industry," BCS
they would stunt the company’s recovery. Global Markets wrote on October 28.
The tax breaks requested by Lukoil are similar Tatneft won about $150mn per year tax break
to the tax relief that will be received by Tatneft’s for its own HVO fields in the course of the debate
Romashkinskoye, Gazprom Neft’s Novopor- over the legislation, but the analysts are not sure
tovskoye and Rosneft’s Priobskoye fields. that the government has the regulatory flexibility
VTB Capital (VTBC) on October 28 calcu- to address Lukoil’s request short of going back to
lated that should such a tax break be granted the Duma with a separate bill.
and match the parameters of the Novopor- Russian lawmakers have approved a major
tovskoye and Romashkinskoye MET deductions overhaul of oil industry taxation, aimed at
(RUB1bn per month if the average Urals price extracting more budget revenues from the sector
exceeds the budget rule threshold), then it might and simplifying the fiscal landscape. The changes
bring $160mn (RUB12bn per year) to Lukoil in have hit Lukoil, Gazprom Neft and Tatneft hard-
2021, or around 2% of 20121 Ebitda. est, while the country’s top oil producer Rosneft
"This request comes after the recent tax has fared relatively well, even securing new tax
changes that removed all tax breaks for breaks as part of the reforms.™

P18 www. NEWSBASE .com Week 44 04•November•2020