April 16, 2014 14:53
Bashneft, Gazprom Neft chiefs urge greater geological exploration role for private sector (Part 2)
MOSCOW. April 16 (Interfax) - Bashneft (MOEX: BANE) President Alexander Korsik called on state bodies to have more confidence in geological exploration by private sector companies.
"It seems to me the state bodies need to show more decisiveness regarding geological exploration. It's time to trust the private sector companies, just like the state companies, to work in the geological exploration area adequately. That would be an appropriate next step for the sector. And it would enable all of us to grow," Korsik said at a conference on stable development of oil exploration and production.
Alexander Dyukov, the head of Gazprom (MOEX: GAZP) oil subsidiary Gazprom Neft (MOEX: SIBN), called for more robust, fruitful cooperation between companies and the state in geological exploration, such as state-private partnership. One example is the geological exploration arrangement for projects in Colombia and Norway.
Dyukov praised Russian tax initiatives, such as allowing a portion of geological exploration expenses to be deducted from the natural resource extraction tax (NRET) liability.
But he said more intensive work was needed for switching to an excess earnings tax (NDD). "To some extent, the switch to NDD will make it possible to forget the phrase 'hard-to-recover reserves.' Companies will pay taxes on profit, not on production, reserves," he said.
Commenting on the statements from Korsik and Dyukov, Natural Resources and Environment Minister Sergei Donskoi said a sort of state-private partnership for geological exploration is already in place.
"Every decision concerning the sector is worked out with the companies. Many administrative barriers are discussed with them, various initiatives are analyzed. Simultaneous investment in exploration from the federal budget and the companies is also a form of state-private partnership. Moreover, the state geological exploration companies, such as Rosgeologia, cooperate closely with private sector companies. All of this, along with the tax breaks provided to companies, confirms the state's clear interest in geological exploration projects," Donskoi said.
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