The shortfall in investment in the oil sector will reach R300bn in 2009, Rosneft head Sergey Bogdanchikov predicted today. In his words, "the shortfall in investment may lead to a reduction in oil production from 490m tonnes to 450m tonnes over five years". Over the period between 2009 and 2013 the shortfall in investment may reach R2,800bn. Bogdanchikov said however that according to an optimistic scenario "should sufficient investment be made, oil extraction in the country could increase and reach 700m tonnes a year".

Bogdanchikov also said that at present 93 percent of the new oil deposit development projects are unprofitable due to fiscal burden and high tariffs for natural monopolies. In his words, "fiscal burden and income tariffs constitute around 70 percent of the price of oil". Thus, he said, "an oil company manages only 7 percent of the price of oil; everything else is taken away".

"This may lead to a shortfall in investment, a drop in extraction and in budget revenue," Bogdanchikov said.

In a time of global financial crisis, the head of Rosneft thinks, "the oil sector needs a completely new tax system." He said that Russian Prime Minister Vladimir Putin had instructed ministries and agencies to draw up a new tax system under which profit, not earnings, will be taxed, as is the case in other countries. "If this is done quickly we will have investment resources for the development of the sector," he said.

Copyright 2009 BBC