Moscow: Lukoil, Russia's second-largest oil producer, is set to boost profit from deposits in the Caspian Sea after the government extends tax breaks to oil produced there starting next year.
The tax incentives will come into force next year and remain in place until projects reach a set level of profitability, Finance Minister Alexei Kudrin told reporters in Moscow Wednesday.
"This is a breakthrough if you look at Lukoil's ability to gain similar incentives to produce as its rivals," Pavel Sorokin, an oil and gas analyst at Alfa Bank in Moscow, said yesterday by telephone.
Lukoil, which holds the most fields in Russia's part of the sea, began production at the Korchagin deposit earlier this year. It has lobbied the government for export and extraction tax relief, currently granted to producers of select eastern Siberian fields, saying the incentives are needed to boost production.
Savings on the Korchagin field may reach $400 million (Dh1.4 billion) if Lukoil gets tax breaks similar to those in eastern Siberia, Sorokin said. It's too early to say what the decision may mean for the company's Filanovsky development, he said.
Filanovsky is the "pearl" of the Russian Caspian, Deputy Energy Minister Sergei Kudryashov said in April.
Lukoil aims to produce more than 200,000 barrels a day, equal to about 2 per cent of Russia's current output, from the Filanovsky deposit alone. It plans roughly 50,000 barrels a day of oil and 1 billion cubic metres a year of gas from Korchagin.
