Russian Tax Policy Has Oil Producers Asking to Be `Left Alone'

When Will Russia and OPEC Cut Oil Production?

Russian oil producers asked Energy Minister Alexander Novak to refrain from again increasing their taxes to help fund the nation’s budget after a slump in the oil price.

“The most intense proposal from the oil people at the meeting was to leave the industry alone,” Bashneft PJSC Chief Executive Alexander Korsik told journalists in Moscow, describing Wednesday’s discussions between oil executives and Novak. Russian oil output in 2016 will likely remain stable at last year’s level if the government doesn’t seek to squeeze more revenues from producers, he said.

The meeting came as Goldman Sachs Group Inc., VTB Capital and Deutsche Bank AG see risk of a tax increase after the collapse in crude slashed government revenue. Russia, which takes windfall profits from oil producers when prices are high, has been forced to draw down reserve funds for this year as the oil price tumbled to the lowest in more than a decade.

“The biggest risk to Russian oil companies is the potential for significant changes to a tax regime that previously insulated them from the impact of falling prices,” Fitch Ratings said in a statement on Jan. 26.

Russia expects output to remain stable this year after oil and condensate production reached a post-Soviet record in 2015, according to the Energy Ministry.

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