Tax on excess profits from extraction of hydrocarbon feed as a completion tax maneuver in the oil and gas sector

Author:

Galina Semenova

Abstract

The relevance of the paper is caused by the peculiarity of introducing a tax on excess profits from the extraction of hydrocarbon feed (hereinafter referred to as EPT), the calculation of tax taking into account the economics of developing hydrocarbon deposits for the entire investment period. The level of tax penalty depends on the profitability of each subsoil plot separately, which will allow the introduction of low-profitable hydrocarbon deposits containing hard-to-recover reserves into development. Nowadays, a differentiated approach is being applied to setting the mineral extraction tax (hereinafter - MET) for oil depending on geographic and climatic conditions, complexity of field development, physical and chemical properties of oil (arctic conditions, offshore projects, new and developed deposits, high viscosity oils, hard-to-recover reserves and others). The introduction of EPT is caused by the need to engage oil reserves, which are currently unprofitable under the existing tax system, in commercial development. The introduction of EPT will allow for an increase in tax revenues both from an increase in the total volume of oil production and through more equitable taxation of ultra-efficient projects.

Publisher

EDP Sciences

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