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Russia’s oil industry may need more tax breaks in three years to regain its pre-Covid share of the global market, Darya Kozlova, head of oil and gas regulation at Moscow-based Vygon Consulting, says in emailed comments to Bloomberg.
Russia’s plans to raise oil taxes will have no significant negative impact on production from most current projects beyond early 2022 when current OPEC+ restrictions are to be lifted.
Yet current projects may not be enough to ensure active oil production growth in Russia.
“So regaining the market share will depend to a large extent on whether the Finance Ministry will agree to additional incentives in three years”
Removing tax breaks for highly viscous oil makes its production uneconomical. If Russia adopts the tax change, companies will likely refuse to develop such fields.
In 2019, viscous-oil projects produced some 10 million tons (around 200k b/d)
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