Friday, April 10, 2009

Interesting Russian Oil Exec. Wisdom

Rigzone has a posting of Rosneft head Sergey Bogdanchikov predicting investment shortfalls for Russia's oil industry. That's not the reason I'm posting this, rather it's his insight of what sets the price of oil:

Bogdanchikov also said that at present 93 percent of the new oil deposit development projects are unprofitable due to fiscal burden and high tariffs for natural monopolies. In his words, "fiscal burden and income tariffs constitute around 70 percent of the price of oil". Thus, he said, "an oil company manages only 7 percent of the price of oil; everything else is taken away".

On revising Russia's tax system:

In a time of global financial crisis, the head of Rosneft thinks, "the oil sector needs a completely new tax system." He said that Russian Prime Minister Vladimir Putin had instructed ministries and agencies to draw up a new tax system under which profit, not earnings, will be taxed, as is the case in other countries. "If this is done quickly we will have investment resources for the development of the sector," he said.

- Brewskie


  1. Just read many of the recent posts, as I am back on line. Terrific assortment of reading.
    BTW, was in Thailand, and I would guess that one out of ten large trucks there is CNG powered. They carry white torpedoes behind the cab, stacked, six or eight.
    This is a proven technology, I see it on busses in L.A. Given the long-term surfeit of natural gas supplies, this seems a natural (sorry for the play on words) option if oil ever does become scarce, along with much higher mpg cars. -B Cole

  2. B. Cole,

    Good to hear you're back form Thailand. I've been occupying myself with vacation this week; posting will resume shortly.