Nikolai Podguzov: «Immediate decisions contravene long-term development of the petroleum industry»
On the 3d of October 2015, Deputy Minister of economic development Nikolai Podguzov delivered a speech at the panel «Fuel and energy complex. How to develop in the context of low prices?»
The Deputy Minister told that the fuel and energy complex gives 50% of income in the Russian state budget, it is a «locomotive of economics» that ensures active development of other industries. «This is because we have a stable and effective taxation system that proved its substantiality, and it is very dangerous to change it within the existing circumstances», he said.
According to Nikolai Podguzov, it is necessary to raise tax revenues, as we may see from the Ministry of Finance point of view, not to increase production of oil. The Deputy Minister highlighted that short immediate profits contravene long-term development of the industry, because a task of tax revenue maximization must anyway be combined with development of the industry. He said that, from our point of view, such decisions are not fully effective.
Today the petroleum industry is not in such a perfect state as several years ago. However, if we consider the debt burden and the minimal ratio, net money flow of companies is almost zero. Nikolai Podguzov also mentioned that if the debt burden will be increased, it will be necessary to cut investments, and most likely that this will be investments in oil production.
In Russia, oil recovery factor is 20%, and this is low comparing to all other countries. The Deputy Minister told that it is necessary to take care about mature oil fields, increase the factor to 40%, prior to commence with other projects related to higher production costs.
«We have 18 billion tons of conventional reserves and 6 billion tons of hard to recover reserves in our country, and it is necessary to deal with traditional and mature fields », told Nikolai Podguzov. He said that there is one more problem: oil fields located in West Siberia. Because initial assessment of the reserves in 2006 was performed incorrectly, it is impossible to receive a privilege due to exinanition, and there are about 30 such fields. If these fields will receive such privilege, it will be possible to significantly increase oil production there, as well as their profitability. This will result in much higher tax revenues.
«I think, taking into account low oil prices, now it would be more correct to use such incomes, than immediate suggestions to increase tax revenues with inconsiderate consequences», finished the Deputy Minister of economic development.