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Fiscal Policy on Oil and Gas Sector: Revised as Often as Wikipedia

  • ID: 4900661
  • Report
  • December 2019
  • Region: Global
  • 52 Pages
  • National Energy Security Fund
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The Tax System in the Oil and Gas Sector Continues to Undergo Radical Changes.

FEATURED COMPANIES

The beginning of 2019 saw the introduction of a new tax regime: additional income tax. That experiment was supposed to start migration of the oil industry to an innovative principle of taxation: on profit, not revenue. It seemed that a new main road was found. In the same year, however, the Finance Ministry launched an overt offensive against AIT.

The fear of loss of government revenue now is more powerful than the threat of causing oil production to collapse in the medium term because of a tax system that does not stimulate investment.

The Finance Ministry would strongly prefer to speed up the tax manoeuvre completion that earns the state budget additional money. Oil and gas companies respond to this with individual lobbying, attempting to wangle special treatment for their projects.

Thinking better of it, the Finance Ministry even tried to persuade the President to impose a moratorium on incentives. Nothing helped, however.

Two cases became real hits of 2019: the one with the Priobskoye field and the fight for Arctic incentives to projects of Rosneft and its satellites. And by the way, neither case has fully been closed: for instance, debate is still under way about how the loss of revenue because of the Priobskoye project will be compensated for. Meanwhile, the spread of AIT was viewed among other things as an opportunity to cancel privileged regimes, but now the matter is again open to question.

Besides, discussion of taxation on the refining segment continued the entire year: the Cabinet tries to get vertically integrated oil companies (VIOC) not to raise prices for motor fuel in the domestic market as a condition for the decision to be passed.

The report gives a detailed account of the following:

  • The oil and gas sector as the key donor to the Russian budget
    • Collection of taxes from oil and gas companies in the context of the acceleration of the tax manoeuvre
    • Change in their share in the government revenue and the Russian GDP
    • Tax payments by the biggest corporations: common aspects and differences
  • AIT: the first results of the experiment
    • The difference in how the Finance Ministry and VIOC evaluate its effects
    • The prospects of the new tax
  • The fight for new tax breaks
    • The activity of Rosneft in the fight for new special treatment
    • The future of Arctic incentives
  • Oil refining in the context of the tax manoeuvre completion
    • Analysis of the mechanism of negative excises and its adjustment in 2019
    • Change of the rules of the game for motor fuel producers
    • Options for compensating for lost revenue through growth in mineral resources extraction tax: financial implications for VIOC
    • “Damper” for jet fuel
  • Taxation on the gas industry
    • Winners and losers
    • The Finance Ministry’s refusal to equalise the tax conditions for Gazprom and independent producers
    • The matter of the price of gas in the domestic market raised again
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FEATURED COMPANIES

Introduction

1. Oil & Gas as Key Donor to Russian Budget. Tax Revenue from Sector

2. Oil Refining in Context of Tax Manoeuvre Completion     
2.1. First results of new taxation on oil refining     
2.2. ‘Tweaking’ negative excise system     
2.3. Damper for jet fuel     

3. ‘Clash of Titans’: Fight for New Tax Breaks
3.1. Epic with incentives for Priobskoye field     
3.2. New Arctic incentives     

4. Taxation on Gas Industry: Winners and Losers

Forecast for Future Developments    

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  • Rosneft
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All materials and sources used for issuing each report are thoroughly verified and analyzed by experts. The information is based on industry statistics, data of oil and gas companies, information of federal and regional mass-media, materials of conferences and round tables.

The analyst has pored on the following goals:

  • Analyses of oil & gas and power industries, political risks within the energy sector, geopolitical problems in connection with the production of hydrocarbons and their supply to the global market, strategic development of companies, new production and transportation projects
  • Consulting on the influence of political factors on the oil & gas business, decision-making within Russian energy companies and government bodies dealing with the energy industry
  • Development of energy business concepts in Russia
  • PR services for oil & gas corporations
  • Analysis of images and reputations of energy corporations
 

 

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