Russian Govt To Give Tax Breaks To Oil Firms

Russian President Vladimir Putin said Tuesday, that the government would give oil companies the tax breaks to explore new fields, a day after they promised to freeze domestic fuel prices until the end of the year, the Financial Times reported, citing the President.

Russia?s Industry and Energy Minister Viktor Khristenko told Putin that the government should lower taxation in the oil sector and, in particular, unpeg the mineral extraction tax from global prices to encourage investment in exploration and development of difficult fields.

In reply Putin said oil companies should be encouraged to invest money in exploration but must not abuse any potential tax breaks. Khristenko added that the government was considering introducing tax breaks for oil companies during the development of new fields.

The Russian minister said that domestic oil companies were producing oil twice as fast as they could replace their reserves. He warned that the growth in Russian oil output next year could be even lower than the 2 percent expected this year.