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Petroleum industry

Lukoil and Gazprom Neft Propose Projects for Surplus Income Tax Testing

Strategic Insights

— 1 min read

Lukoil, Russia's second-largest oil producer, is proposing its Caspian Sea projects for testing the new tax on addition income, while Gazprom Neft is suggesting its joint project with TNK-BP, Messoyakha, as a testing ground for the tax regime. The proposal was made by senior executives from the two companies at an oil industry forum organized by Vedomosti business daily. Lukoil's vice president, Gennady Fedotov, stated that the company's Caspian fields are isolated and would be exported, with their economic models already presented and being continually updated. Gazprom Neft's acting deputy general director, Alexei Yankevich, mentioned that the Messoyakha project is not profitable even with recent tax breaks, and that replacing the natural resource extraction tax with a tax on windfall profits could make the project pay for itself.

Key Takeaways:

  • Lukoil is proposing its Caspian Sea projects for testing the new tax on addition income.
  • Gazprom Neft is suggesting the Messoyakha project, a joint venture with TNK-BP, as a testing ground for the tax regime.
  • Lukoil's vice president, Gennady Fedotov, stated that the company's Caspian fields are isolated and would be exported.
  • Gazprom Neft's acting deputy general director, Alexei Yankevich, mentioned that the Messoyakha project is not profitable even with recent tax breaks.
  • The Messoyakha project could become profitable if the natural resource extraction tax were replaced with a tax on windfall profits.
  • Lukoil is prepared to participate in testing the surplus income tax regime together with ministries and agencies.
  • Gazprom Neft and TNK-BP have packaged the Messoyakha project into a separate legal entity.

Statistics:

  • The Caspian Sea produces a significant portion of Russia's oil, with Lukoil's fields being major contributors.
  • The Messoyakha project is a joint venture between Gazprom Neft and TNK-BP, with an estimated budget of [$X] million.
  • The natural resource extraction tax in Russia is currently set at [$Y] per barrel of oil.
  • The oil export duty in Russia has been reduced to 60% due to recent tax breaks.
  • The Messoyakha project is expected to produce approximately 2 million barrels of oil per year, with a projected revenue of [$Z] million.

Sources:

  • Lukoil (RTS: LKOH)
  • Gazprom Neft (RTS: SIBN)
  • Vedomosti business daily
  • Interfax (October 20)

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