Russia's government is easing the tax burden on petroleum joint ventures with foreign companies.
Foreign companies operating in Russia say they welcome the proposed elimination of a $5/bbl oil export tax that was implemented in 1992. Foreign companies have argued the tax is detrimental to investment in Russia and have lobbied for its removal.
Russian Prime Minister Viktor Chernomyrdin signed a decree Oct. 14 approving tax exemptions. An excise tax of $1/bbl was withdrawn earlier this year.
JVS AFFECTED
At least six Russian JVs have a chance to make money, now that Moscow has decided to exempt them from export tariffs effective Sept. 1.
Aminex plc, Dublin, equal partner with Russia's Komineft in raising production from three oil fields in the Komi Republic, said more than $4.50/bbl in saved taxes would enable it to produce substantial profits over the year,
Aminex said the six JVs that have won tax breaks are: Polar Lights, involving Conoco Inc.; White Nights involving Phibro Energy Inc.; KomiArcticOil involving Gulf Canada Resources Ltd. and British Gas plc; Amkomi involving Aminex; Siberian American Oil Co. involving Pennzoil Co.; and Chernogorskoye involving Anderman/Smith Operating Co.
"Aminex has achieved a remarkable turnaround in a very short period," said Aminex Chairman Brian Hall, "demonstrating that independent oil companies can effectively compete in the vast and rapidly developing oil industry of the former Soviet Union. We believe that we are laving the foundations of a solid and significant business in Russia."
Amkomi joint venture involves boosting oil production from North Aresskoya, Isakovskoya, and Upper Kosyouskoya fields, which lie 1,200 km northeast of Moscow.
Aminex raised output from 1,200 b/d of oil in January to more than 2,000 b/d recently. Half the produced oil is net to Aminex. The company is negotiating a second, larger project in the same region.
CANADIAN COMPANIES RESPOND
Gulf Canada says an estimated $15 million in a holding account to cover the tax now will be used for other expenses.
Gulf says the taxes would have meant a loss on each barrel of its 15,000 b/d in exports from Russian production.
Canadian Fracmaster Ltd., Calgary, says it expects approval by the end of October for cancellation of the export tax. Fracmaster operates four projects in Siberia and exports 27,000 b/d of crude. The company says one of its projects does not qualify for the tax exemption.
PanCanadian Petroleum Ltd., Calgary, which exports about 4,500 b/d, says it has also applied for the tax exemption.
