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Russian Finance Ministry to return benefits to oil workers only after OPEC+ deal is over

Alexei Sazanov noted that Finance Ministry was ready to discuss the parameters of the additional income tax regime for viscous oil, and it "will start doing this with oil companies in the fall"

MOSCOW, July 30. / TASS /. The Russian Ministry of Finance considers it inappropriate to return the privileges for the production of extra-viscous and high-viscosity oil canceled from 2021 until the completion of the OPEC+ deal, under which Russia limits its oil production, Deputy Finance Minister Alexei Sazanov told reporters on Friday.

"The OPEC+ deal has not been completed, here is the answer. Our position is the same - while the OPEC+ deal is working, it is inappropriate to return the benefits. As soon as we withdraw from the OPEC+ deal, now it is the end of 2022 then we are ready to return to discussing this issue," he said. Sazanov added that the Finance Ministry is ready to discuss the parameters of the additional income tax (AIT) regime for viscous oil, and "we will start doing this with oil companies in the fall." Sazanov called it unlikely that it would be possible to allocate a separate category for this type of oil in the AIT. "Hardly. We believe that a new category is not needed here. These are the same traditional fields, the only question here is that capital costs are higher here than in traditional fields. And, perhaps, there is a limit on costs that exist for deposits extra-viscous oil can be increased. Here we are ready for discussion," he said.

According to him, it is not worth counting on the fact that new parameters for viscous oil will start working in 2022. "From 2022 - definitely not, but from 2023 - we need to look into it. It depends on whether the OPEC+ deal ends or not," Sazanov said. The OPEC+ agreement, according to which Russian companies reduce oil production, is valid until the end of 2022. Oil workers have lost their privileges in the development of reserves of high-and extra-viscous oil since the beginning of 2021, after which Lukoil and Tatneft announced that their development had become unprofitable. Later, the Finance Ministry decided that incentives for such oil could be earned as part of the personal income tax, but only starting in 2024. However, the oil companies and the Energy Ministry reported that this is a too distant prospect, and during 2021-2023, companies will incur losses from these projects, which will also affect the volume of investments.