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- Free regime: the authorities will prepare measures to support the fuel and energy sector by November
Free regime: the authorities will prepare measures to support the fuel and energy sector by November
The Ministry of Finance, together with the Ministry of Energy, will have to work out and submit to the government proposals on preferential tax regimes for companies operating in the field of oil and gas production by November, according to the list of instructions from Prime Minister Mikhail Mishustin. The oilmen have repeatedly asked for this, but they have been refused. In addition, the ministries will have to develop a set of measures to expand Russia's presence in the global oil and gas markets. The results of the issues discussed will be included in the implementation plan of the energy strategy of the Russian Federation until 2050. Whether oil and gas companies will receive preferences is in the Izvestia article.
Measures to support the oil industry
The Ministry of Finance, together with the Ministry of Energy and the Ministry of Economic Development, should work out the possibility of providing preferential tax regimes for oil and gas companies by November 2025. This is stated in the list of instructions of the head of government Mikhail Mishustin, which was reviewed by Izvestia.
"Consider the possibility of providing preferential tax regimes to companies in the field of oil, natural gas and gas condensate production, including expanding the scope of the tax on additional income from the extraction of hydrocarbons, as well as extending the period for granting tax benefits for a long-term period, taking into account the forecast for the required volumes of hydrocarbon production in line with the energy strategy of the Russian Federation, with obligations in as part of the OPEC deal, as well as taking into account the analysis of financial and economic models of projects applying for tax benefits," the document says.
The list of instructions following the results of the strategic session on the development of the oil industry until 2050, which took place on April 1, is dated May 24. In total, the document contains four paragraphs, two of them refer to financial support for domestic oil and gas.
As noted in the document, the federal executive authorities (FOI) will have to submit to the government for subsequent inclusion in the plan for the implementation of the energy strategy until 2050 (ES-2050) an agreed set of measures in various scenario conditions, including "the definition of clear deadlines and targets for existing and prospective mechanisms of state financial support." oil and refining industries".
The government approved the energy strategy on April 12, 2025. The document takes into account the growth of global energy demand by 20% by 2050, as well as the diversification of export supplies. According to the targets, in order to maintain Russia's position in the foreign market and consistently supply the domestic one, oil production should reach 540 million tons per year by 2050.
To achieve these goals, as noted in the strategy, "it is necessary to create conditions for the introduction of unprofitable reserves, which amount to more than 10 billion tons." New production regions should produce about 80 million tons on the horizon of 2036. By the end of 2024, oil production in Russia amounted to 516 million tons. As for gas, its extraction should be more than 1 trillion cubic meters compared to 685 billion a year earlier.
Tax burden on the oil industry
The Ministry of Energy has repeatedly said that in order to achieve these goals, Russia needs to double its investments in the oil industry.
As Izvestia has already written, the ministry is preparing a new tax maneuver as part of the implementation of the energy strategy, which implies reducing the burden on the industry and doubling investments in it. This will have a multiplier effect on related industries. The agency believes that their contributions to the budget will be able to make up for the shortfall in income and preserve production.
However, the Ministry of Finance has so far taken a rather tough position regarding reducing the tax burden on the industry. In May, the deputy head of the department, Alexei Sazanov, stated that no relief was planned for oil companies yet. At the same time, Russian Finance Minister Anton Siluanov noted that "the tax burden on the oil industry is one of the highest, and it is impractical to increase it, otherwise companies' sustainability may be undermined."
According to Yuri Stankevich, deputy chairman of the State Duma Committee on Energy, the April strategy session led by Prime Minister Mikhail Mishustin, which discussed the prospects for the development of the oil industry, finally outlined the contours of an ideological discussion on medium- and long-term measures to support this industry.
— Maintaining annual production in excess of 540 million tons per year is no longer an end in itself. The continued restrictions under the OPEC deal allowed Russia to temporarily abandon the need for production at fields with low profitability under standard tax conditions. Now the issue of granting any benefits will be resolved through the prism of the emerging budget effect. And the effect is tangible, not long-term. For this reason, when considering the initiatives of companies or the Ministry of Energy of proposals to stimulate production, the Ministry of Finance carefully examines the financial and economic model applied to each deposit or project," the deputy noted.
On the other hand, in his opinion, without expanding the NDT perimeter and taking into account objectively increasing operating costs, the country may find itself in a situation of uncontrolled production reduction, which automatically carries risks of ensuring economic and energy security.
— Without an increase in budget expenditures, oil production will begin to decline steadily over the next 5-7 years. But their increase also casts doubt on the need to maintain the share of extractive industries in the economy as a whole. The government will have to balance things out. I believe that the decision on the need for additional benefits for the oil industry will prevail and in 2026 we will see a coordinated position of the Ministry of Energy and the Ministry of Finance on this issue," said Yuri Stankevich.
According to Olga Orlova, Head of the Industry department at the Institute of Oil and Gas Technologies, the predominant role of oil and gas companies in the Russian economy is obvious. She recalled that the share of the fuel and energy complex in Russian GDP by the end of 2024 was about 20%. Such data was provided by Deputy Prime Minister Alexander Novak.
— By the end of 2024, the total profit of Russian oil and gas companies amounted to 5.7 trillion rubles, despite the fact that this industry paid 11.131 trillion to the treasury. The banking sector, which ranks second in terms of profitability, showed a net profit of 3.8 trillion rubles. But last year, the state budget received 111 billion rubles in income tax on bank deposits. Oil companies have always talked about putting too much strain on the industry, because they have always paid the most in comparison with other sectors of the economy. And it was justified — for many years the domestic economy has been focused on commodity exports," she said.
Ekaterina Kosareva, Managing Partner of VMT Consult, believes that it is not difficult to understand the position of both the Ministry of Energy and the Ministry of Finance, but it is necessary to work out a compromise solution.
— It is necessary to start work on changing the tax regime for oil and gas companies, despite the fact that everything that is produced today is profitable. It is likely that by November, the Ministry of Finance, together with the Ministry of Energy and the Ministry of Economic Development, will prepare several scenario plans with various tax regime options," she said.
It is not worth waiting for changes in the level of fiscal burden in the next year or two, the expert believes.
"The country is living under sanctions, and we need to look for solutions in order not to lose an even greater share of the global market," the interlocutor believes.
Increasing Russia's share in the global oil and gas market
In addition, the Prime Minister instructed the ministries (the Ministry of Energy, the Ministry of Energy, the Ministry of Finance, the Ministry of Industry and Trade, the Ministry of Transport and the Ministry of Foreign Affairs) to submit to the government a set of measures providing for the conclusion of bilateral agreements with China, Turkey and India to circumvent anti-Russian sanctions of unfriendly countries, including price fixing for a long-term period, as well as proposals to expand Russia's share in the growing segments of the global energy market.
Izvestia has sent inquiries to the Government and the designated ministries.
According to Valery Andrianov, associate professor at the Financial University under the Government of the Russian Federation, an increase in Russia's share in the global oil and gas market is possible, firstly, by occupying new niches.
— At the same time, we are talking not only about increasing supplies to such large and promising markets as China, India and Turkey, to which the flows of our raw materials have shifted after the imposition of sanctions. There is also a search for narrower niches, that is, the establishment of supplies of oil and petroleum products to those countries to which they had not previously gone, from Brazil to the countries of the Middle East. In the medium and long term, great opportunities are opening up in Africa and in the rapidly developing countries of Asia. This is due to both population growth in them and a fairly rapid increase in energy consumption by industry and agriculture," he said.
The expansion of sales markets is also possible due to the formation of new rules for trading energy resources, primarily the transition from spot transactions to long-term contracts.
— In the last decade, we have seen the "offensive" of the spot model, which was presented by its ideologists as the most flexible and responsive to constantly changing market realities. But in practice, it is not beneficial to either sellers or buyers of energy resources. Companies producing hydrocarbons should have guarantees of a long—term payback on their investments, especially against the background of the exhaustion of large deposits and the need to implement new exploration and production projects. For buyers, long—term contracts are a guarantee of obtaining energy resources at a fixed price, which is again necessary for planning large industrial and other projects. The sad experience of Europe, especially in the gas sector, has shown that spot is a path to instability of energy markets and, as a result, to an economic recession," Valery Andrianov added.
He believes that the return to the practice of long—term contracts with consumers, the creation of mutual guarantees of supply and prices, and, finally, the elimination of the speculative component of energy trade is an important trump card of Russian energy policy.
Currently, contracts with foreign buyers specify a cost formula linked to global indices, which is a risk for both the budgets of exporting countries with a sharp drop and unreasonable costs for importing countries with a sharp escalation in prices, said the CEO of Independent Analytical Agency of the Oil and Gas Sector LLC (NAANS-MEDIA LLC) Tamara Safonova.
— Over the past five months, the budgets of exporting countries have essentially depended on the unleashed US trade wars, and approaches to pricing strategic resources have long needed to be transformed. Fixing prices and volumes acceptable to the parties in long—term contracts can lead to stabilization of the filling of Russia's oil and gas revenues and predictability of revenue for Russian companies, the expert believes.
At the same time, in her opinion, in contracts for the supply of Russian energy resources, volumes can be fixed for a long—term period, while prices can be reviewed annually. Importing countries of Russian energy resources on the basis of long—term agreed volumes will be able to reduce dependence on Western countries and ensure the stable development of their economies, she concluded.
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