Expanding excess profit tax, enhanced recovery support could provide potential for oil output growth - Gazprom Neft CEO Dyukov

MOSCOW. Dec 16 (Interfax) - Expanding excess profit tax and government support for enhanced oil recovery methods could provide potential for oil output growth in Russia, Gazprom Neft CEO Alexander Dykuov told reporters.

"As for the tax system, it is important for us that gradual transition to a tax system that provides for taxation of income, not revenue, is continued. We are interested in increasing the number of deposits that are transferred to the EPT system, in the third and fourth groups. This taxation mechanism is, firstly, fairer, and secondly, it encourages additional investment in the development of deposits," Dyukov said.

A second important state policy area which could create potential for production growth, including at mature fields, is the encouraging the use of tertiary enhanced oil recovery methods, above all chemical EOR methods, he said.

"At those fields where chemical EOR methods can be used effectively the oil recovery rate can be increased from 30-35% to 50-55-60%. We have already done pilots and have seen high results. But the relevant tax changes are needed for companies to be able to use this method of increasing oil recovery. And if we talk about fine-tuning the tax system to ensure additional investment in the industry, make oil production more efficient and more rational, then incentivizing the use of chemical EOR is one area in which companies, the Energy Ministry and Finance Ministry can work together," Dyukov said.