Russians Draft Tax Breaks for Oil and Gas Companies

The Russian government wants to make it easier for E&P companies to do business within its borders. On March 31, the Russian Ministry of Finance introduced a plan that would allow tax breaks for continental shelf exploration and production.

On March 25, Russian Finance Minister Alexei Kudrin told reporters he would propose increasing the non-taxable limit of oil to $15 barrel. The current threshold per barrel is $9.

This type of tax relief would result in a break of $4.2 billion overall, Kudrin said.

"As far as the mineral extraction tax on gas is concerned, the decision was taken to postpone the discussion until 2010 … This decision is linked to the considerable investment program of Gazprom," Kudrin told reporters.

The proposal draft introduced March 31 includes a possible tax holiday for companies exploring offshore areas or mineral extraction tax breaks.

The finance ministry proposal draft also stated that the mineral extraction tax for natural gas would not be increased before 2011.

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