Vladimir Putin Signs Law to Reduce Mineral Extraction Tax for Unconventional Oil Production

Russian President Vladimir Putin on Tuesday signed a law to ease the tax burden on operators developing Russia’s unconventional oil resources. The law will differentiate the tax rates for hydrocarbon production based on the permeability of the rock, depletion of the reservoir and the size of the oil bearing layer. The amendments to the Russian Tax Code introduce tax breaks for the production of new unconventional oil through investment projects by changing tax rates for oil produced in certain oil bearing layers, as opposed to overall reserves.  The RF Government will decide the figures representing the permeability of an oil bearing layer using new guidelines, and the Russian Cabinet of Ministers is being given the right to set formulas to calculate the rates on export duties of unconventional oil.