According to Prime-Tass news agency, Russia's Energy Ministry said Thursday that the country's tax structure makes the development of 49% of new oil fields not economically viable with Brent crude at $60 per barrel.
Even if Brent crude settles at $80 per barrel, 39% of new reserves are unprofitable, the Ministry indicated. Moreover, at an even lower price of $40 per barrel, that number increases to an unsettling 93% of new oil reserves being unprofitable.
To address this issue, the Ministry reported that it is revising the taxation system, which envisages a tax on "excessive profits" of oil companies.
Under the current tax system, Russia's oil output could potentially decline by 8% in 2013 from 488 million metric tons in 2008 and may decrease further to an estimated 440 million tons in 2015, and subsequently 421 million tons in 2020, the Ministry said.
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