Alexander Dyukov Reports Dialogue with the Ministry of Finance on Stimulating Drilling and the Fuel Damping Mechanism
Expansion of the Fourth Group of Fields under the Added Income Tax Also Under Discussion
Oil companies are in dialogue with the Ministry of Finance regarding the expansion of the fourth group of fields developed under the Added Income Tax, as well as measures to stimulate drilling. Adjustments to the fuel damping mechanism may also be required in the long term, said Alexander Dyukov, head of Gazprom Neft, speaking to journalists.
“As you know, dialogue with the Ministry of Finance is ongoing, including on the expansion of the fourth group under the Added Income Tax, on measures to stimulate drilling, and on a number of other issues. In the long term, and this was also discussed yesterday at the board meeting of the Ministry of Energy, the industry needs incentive measures to develop hard-to-recover reserves, the share of which in total production is steadily increasing. Work on specific proposals is already underway,” he said.
Dyukov also expressed the view that adjustments to the fuel damping mechanism are not required at present, but may be needed in the long term.
“I believe that at the moment no adjustment of the damping mechanism is required. The mechanism is functioning effectively and fulfilling the tasks assigned to it. However, in the long term, further fine-tuning may well be necessary,” he said.
Since the end of last year, following the tightening of sanctions on the Russian oil sector, discounts on Russian oil increased to 27–30 United States dollars per barrel, which led to a deterioration in the “export alternative” price of Russian petroleum products in the damping formula and resulted in oil companies making payments to the Russian budget, rather than receiving them. Oil companies had requested that the discount be capped within the damping formula, but the Ministry of Finance emphasised that this would result in lost budget revenues and stated that no such discussions were taking place.
After the outbreak of the Middle East conflict, discounts on Russian oil began to narrow, in some cases reaching zero or even turning into a premium.
