Tax Cuts Likely to Benefit Russian Oil Service Companies

Russian oil-field service companies could be among the biggest winners as the government slashes oil-sector taxes in a bid to revive stagnating production, industry participants say.

After annual growth of up to 10% at the start of the decade, Russia – the world’s second-largest crude producer – saw output edge up by just 2.2% last year, with oil production down 0.1% year to date as what many deem an excessive tax burden hampers investment in new fields.
But following much lobbying on the part of the industry, the government recently agreed to reduce its key extraction tax and promised tax holidays for producers developing certain regions of the country.

The proposals could boost sector profits by as much as $20 billion a year according to some estimates and could benefit local service firms like Eurasia Drilling Co. Limited (EDCL.LN) and Integra Group (INTE.LN) to an even greater extent.

Rigzone