15 comments on Gazprom, Russian plans and that niggling worry...
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As far as I can recall there is an export tax in Russia which increases progressively with the world oil price. So a high world oil price minus high export tax could make marginal wells uneconomic.
OK, that would explain the tax part of the costs, which I did not understand.
obdacher - Thanks, that would certainly explain things. Not sure about the rationale for such a tax structure though...
[BTW - for those of you new to TOD, Dave Cohen did a comprehensive Feb 2006 piece on Russian oil production and reserves which is essential reading. He didn't take an official stance on future Russian production, but in his concluding remarks offered the opinion that production would be in the 9 to 10 mbpd range until 2010 and thereafter would decline fairly slowly]
The export duty is only part of the problem. Another part is oil extraction tax. This tax is based on the international price of oil but must be paid even on the amount sold internally at much lower price. So, the more the international price of oil, the less profitable is internal sales. Many old wells are abandoned due to this problem.
I believe Putin did say over the last few years that taxes and tariffs would be adjusted to ensure that Russia always had enough oil "for home use" versus export. The Kremlin is attempting to manage its resource base, though we might not like how they are doing it.