In his column in the Neft Rossii magazine, Anton Oussov, Partner and Head of KPMG’s Oil & Gas Practice in Russia and the CIS, contemplates the measures that need to be taken to prevent an abrupt fall in oil production in Russia and ensure the effective development of reserves that are hard to recover.
Anton notes: “Recently many oil & gas industry experts and practices have been predicting a significant decline in oil production in Russia in the period 2015-2020, which would without a doubt lead to a decrease in state and budget revenues… The complicated situation in the oil production sector is coupled with the negative geopolitical environment, the restrictions on foreign investments in the oil & gas industry, and also the obstacles imposed on private Russian companies when it comes to work on new fields.”
In the article Anton highlights a number of top priority measures that should act as an incentive to further development of Russia’s oil & gas industry. The following measures may be emphasized: changing the taxation of the industry, including the transition from the taxation of total oil production in the form of mineral extraction tax or export duties to the taxation of excess profits; granting the maximum possible number of participants access to Russia’s oil & gas and oil field service market – both Russian and foreign; borrowing, adapting and localizing state-of-the-art foreign technologies in oil & gas production; and also nurturing national talent in different areas of science and technology related to oil and gas production.
Implementing the changes in the aforementioned areas would create the requisite terms and conditions for the significant growth and development of the Russian oil & gas industry. Anton concludes: “According to expert forecasts, traditional commodities will remain the underlying foundation for the global energy sector, accordingly leadership in this area will to a large extent determine Russia's position on the international scene.”