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A fight for petrodollars

Will the government be able to force oil companies to share the profits

Драка за нефтедоллары

Victoria Fomenko

The Ministry of Finance of the Russian Federation spoke about the need to reduce tax deductions that receive company — exporters of oil. Representatives of the oil industry, in turn, responded with cries of resentment and indignation: they say that the state is trying to Rob them, but higher taxes will reduce oil production.

Although this is not the first for the last year and a half the oilers attempt to blackmail the state, it can be called an unprecedented degree of arrogance. The cries: “Help me, robbed!” and complaints of forced stagnation in terms of unfairly low energy prices, the oil companies all this time had received no losses and profits, he managed to increase their revenues compared to 2015.

The Ministry of Finance has encroached on the sacred

According to the Federal budget, the total revenue of the Russian Treasury in 2016 should be 13,73 trillion. While a significant portion of funds that the country will have to live another ten months, of course, is income from the extraction and export of raw materials: 3,66 trln rbl. should arrive into the Treasury as tax on mineral extraction (met) and 2,38 trillion the government will work on export duties.

Budget expenditures will amount to 16,09 trillion. Therefore, a 2.36 trillion — the size of the deficit, which should be something to cover and do it fast. In this regard, Finance Minister Anton Siluanov made and surprisingly common for representatives of the Russian monetary authorities thought that it should change the amount of provided oil companies a tax deduction. Under current conditions, the Minister said, this deduction is purely for the “natural” financial and economic reasons has become inappropriately large. After the fall in oil prices, the tax system began to work in favor of the oil companies and, accordingly, to the detriment of the state Treasury.


By rules of $ 15, the proceeds from the sale of each barrel of oil that is not taxed, as it is believed that this is the cost of production per barrel, the tax should be levied only on the net income of an export company. Thus, after the fall of world prices to the level of 27-25 dollars./Barr. almost half of the total revenue of petroleum was analogalley.


And okay, if oil companies are carrying all costs solely in dollars — then one could nod to the fact that the rouble fell and the cost of the barrels had increased accordingly. But since a large part of the cost of Russian oil in rubles. As a result, in monetary terms, the costs of the Russian oil has decreased even more than her income! And the resulting margin were hiding behind the tax deduction.

“Logically, now we need this deduction to adjust. According to our estimates, about two times,” — said Siluanov.

Time to cut costs

According to preliminary estimates, at the price from 30 to 50 dollars per barrel and an exchange rate of 64 rubles per dollar, the revision of the tax deduction will increase revenues in the amount from 650 billion to 1 trillion roubles. That is to close a quarter to half the budget deficit.

Before reducing production, as they “raskulachivanie” the oilers are trying to scare the townsfolk (it supposedly will be the consequence of the fall in their income), the reality is completely natural and normal process. This happens all over the world. Last year, low oil prices made unprofitable, a number of large projects in North America have been curtailed work on 46 projects (data for September). By mid-January 2016 the number of cancelled projects has increased to 68, and their total value was $ 380 billion.

Драка за нефтедоллары

Of course, first came under attack, unconventional deposits of shale oil in the USA, the development of oil Sands in Canada, deepwater drilling of wells on the territory of several countries. The profitability threshold has been passed yet at 50 dollars per barrel. And at 30 $ a barrel, even the leaders of the industry have decided enough is enough, and stopped major projects, having been engaged in the optimization of costs.


According to experts of consulting company Wood Mackenzie, the companies of the Western type in the near future will be able to reduce their costs by 10-15%. Among those who “went to winter”, was energy giants Chevron, ConocoPhillips and Hess Corp. British BP decided to spend $ 12 billion on the development of the Egyptian gas offshore, abandoning major projects in the oil.


In other words, prudent Western oil companies moved into the “squandering” of already developed fields, waiting for the gradual decrease of oil on the world market will not turn the price trend. Such is the simple business strategy: if oil is expensive — and I need you to scout the storm, if it is cheap – live that is. Can, when they want. Not an example of our — which in the first place and therefore don’t want hundreds making up ridiculous excuses why they can’t.

The issue price of

Last fall, the Finance Ministry has already tried to force the oil industry to take on their fragile shoulders part of the burden. Then, the Department proposed to count the tax deduction is not at the current dollar rate, and at lower, pre-crisis, which would have given budget of 1.6 trillion additional rubles in 2016-2018. Of course, the oil industry would feel the difference in costs by the same amount. In particular, Rosneft would have had to pay in the budget of 171 billion rubles more than the current scheme. The contributions of “LUKOIL” will increase by 70 billion, “Surgutneftegaz” — on 48 billion, “Gazprom oil” — on 37 billion, “Tatneft” — on 20 billion, and “Bashneft” — on 15 billion roubles.

The term to waive dividends and investment funds is not happy with the oilers, and they rushed to the energy Ministry with a request to fail the initiative of the Ministry of Finance. The lobbying was successful, the proposal of the Minister Siluanov was not accepted. Oil companies have retained profits of devaluation, and the budget — a hole in three percent of GDP.

As for the current situation, then, of course, a trillion rubles — the amount for the state and oil companies powerful enough to fight for it. But much more important in these circumstances, moral choices of the government: for whose account to emerge from the crisis and plugging budget holes? Once again to climb in a pocket to farmers, small and medium enterprises, industry, the public, or to shake down the “effective” managers at the pleasure of disposing of national property?

…Even if we gave your bowels in private hands, instead of leaving them in the state, let’s at least not going to grovel before the lords of the subsoil, going over them, and donating their wealth for a song.

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