* 'Tight' oil may add 2 million bpd of additional output a
* FinMin expects tax breaks from Jan.1 2014
MOSCOW, March 18 Russian tax breaks for shale
and offshore oil, to unlock millions of barrels, will come in to
force on Jan. 1 2014, a Finance Ministry official said on
The tight oil tax package will make Russia one of the few
countries to incentivise the production of energy resources from
shale and other 'tight' rock.
The package will cut the tax burden which is one of the
world's highest for oil and gas production and exports and
prevents investment in fracking and other expensive
unconventional production technologies.
"The draft law on offshore is practically ready. This is, in
effect, a special tax regime. The key point of this is scrapping
export duty and a sharp reduction of mineral extraction tax,"
Deputy Finance Minister Sergei Shatalov told reporters on
"This will be implemented on Jan. 1 2014," he said, adding
that tax relief for 'tight' oil would also be introduced around
The Russian government is aiming for oil production of at
least 10 million barrels per day, the world's largest, this
decade. Oil and gas output brings half of state budget revenues
in the energy-dependent economy.
Last year, Russian President Vladimir Putin approved a
package of stimulus measures aimed at tapping huge
unconventional resources of oil, which could boost Russian oil
production by up to 2 million barrels per day.
Putin also flagged tax relief for companies that tap
offshore oil reserves, after state-run Rosneft reached
an agreement to develop Russian Arctic undersea resources with
ExxonMobil. Rosneft has also signed similar deals with
Eni and Statoil.
ExxonMobil also agreed to develop onshore 'tight oil' with
The centrepiece of the package for 'tight oil' tax relief is
a sliding scale of tax breaks for investors, which would grant a
discount of 50 to 100 percent on mineral extraction tax
depending on the permeability of the rock.
On Friday, Russian Energy Minister Alexander Novak said an
initiative to provide tax incentives for oil producers to delve
into 'tight oil' reserves is being revised at the moment and
will soon be sent to parliament.
Hydraulic fracturing, or fracking, which brought a boom in
U.S. unconventional oil and gas output, is already in use at
some fields in Western Siberia, the Soviet-era oil heartland,
but has yet to open up the so-called tight oil targeted in the
The tax package must pass in order for Exxon to proceed with
a drilling venture targeting Rosneft's old west Siberian fields.
"It should be discussed and sent to the lower house of
parliament. I think it will be Jan. 1 (when the law will be
enforced)," Shatalov said on Friday.