Tatneft Postpones Heavy Oil Projects, Waiting for Tax Relief
OAO Tatneft (TATN), an oil producer in Russia’s Tatarstan region, will wait to get tax breaks before returning to possible heavy oil developments with partners such as Royal Dutch Shell Plc and Chevron Corp.
Tatneft had planned to develop its bitumen fields with foreign companies, who concluded the projects aren’t economically feasible, Deputy General Director Rais Khisamov said at a round table in Moscow today.
“We said let’s work out a tax-break option for these fields,” Khisamov said. “Afterward we’ll get back to that issue.”
Shell, BP Plc and Exxon Mobil Corp. are among international energy companies betting on extraction of tar-like bitumen from Canada’s oil sands to boost reserves and output. Russian oil producers are seeking tax incentives to develop remote and difficult deposits as production of lighter crude at traditional western Siberian fields declines.
Russia could produce an extra 100 million tons of crude over the next 10 years, adding $30 billion to $35 billion in budget revenue, should tax breaks be introduced, Tatneft Deputy General Director Azat Yagafarov said.
Russia’s reserves of accessible crude, which currently make up 70 percent of production, have dwindled to 30 percent of the total, OAO Lukoil Board Chairman Valery Grayfer said today. The rest are hard-to-reach or highly viscous crude, he said.
Tatarstan’s 450 bitumen fields hold from 2 million to 3 million metric tons of highly viscous fuel each, Khisamov said. The technology used to tap smaller fields is different from that in Canada, making tax relief more necessary, he said.
The government may approve tax breaks for smaller fields by year-end, said Pavel Karchevsky, a deputy director at the Energy Ministry’s oil and gas refining department.
To contact the reporter on this story: Anna Shiryaevskaya in Moscow at email@example.com