Russia must enable SMEs to operate in oil sector - Putin
YEKATERINBURG. June 30 (Interfax) - One of the Russian government's top priorities is to put the conditions in place for small and medium businesses to operate in the oil sector, Prime Minister Vladimir Putin said at a United Russia conference in Yekaterinburg.
"One of our top priorities is to put the conditions in place for SMEs in the oil sector," he said.
The development of small fields and raising well flows is a considerable reserve for sustaining oil production at 500 million tonnes, he said.
Major investment is needed in exploration, oil recovery and new technology, he said.
Putin said 300 million tonnes of the 500 million tonnes of oil that Russian produces are produced in the West Siberian oil province.
"I again ask the Finance Ministry and Economic Development Ministry to look at the profitability of operating at small field and to build a mid-term policy," he said.
Putin said the ministries should analyze taxation in the course of this work. "If [tax breaks] cannot be introduced right now, let them show when this will be possible, so that small business are able in the long-term to plan their work, their incomes and expenditures," Putin said.
Small oil companies should not expect tax breaks in the short term. "The oil and gas sector is considered to be profitable and it does not need special tax regimes. Small fields are usually in regions that have communications and infrastructure as a rule. At a time when the budget is not balanced, the fiscal agencies, above all the Finance Ministry, object to lower taxation and tax breaks. It is difficult to argue with this for now," Putin said.
Indeed, the government is raising tax for the gas industry.
But the government will "definitely return" to the issue of tax breaks for small oil companies once the budget has been balanced, Putin said.