Reforming the Russian Oil and Gas Sector (Comparison with Norwegian Practice)

Abstract

The objective of this paper is to analyze the basic taxation principles in the Russian petroleum industry, identify problems that impede its effective functioning and consider the possibility of reforming the industry’s regulation. The current Russian taxation system, based on the hydrocarbons’ volumes extracted and not on the financial performance of oil and gas companies, does not fully take into consideration the economics of oil and gas projects. Various measures taken by the state in this area, such as tax relieves and the introduction of lowering ratios, have a positive effect on the efficiency of resource development, but do not affect the very foundations of the system. The current situation in the Russian oil and gas industry makes it extremely relevant to review its taxation policy. In this regard, the paper further considers the Norwegian experience in the taxation of oil and gas industry. The author uses methods of comparative analysis and generalization, as well as statistical and systematic methods of scientific analysis. In conclusion the author analyzes the possibility to apply basic principles of Norwegian oil and gas industry taxation to the Russian petroleum sector.