No Conditions Yet Guaranteeing Stable Development of Russia's Oil Industry

Igor Usufov, Russia's Energy Minister, believes no conditions to guarantee the stable long-term development of oil industry have been created in the country yet. The statement was made during yesterday's meeting at the ministry on oil-related issues. The minister also said that the preservation of the competitiveness of the industry, as goes its position on the markets, was the first priority and, 'We have not yet gained back our share on the world markets of energy resources.' The important problem, according to Mr. Yusufov, is that since 1994, the growth of discovered petroleum resources has been offsetting the natural loss of these resources as oil is extracted to no more than 80%. This is the consequence of that prospecting for oil dropped, over the period, by at least three quarters due to the lack of funding. Lately, in the Eastern Siberia, there has been no prospecting done whatever. The minister suggested that the ministries of natural resources and energy jointly with other governmental agencies be charged with developing an effective scheme of the financing of geological prospecting efforts.

The other strategic priority, the Minister continued, was the rehabilitation of oil fields. Today, 17 million tonnes of oil is annually produced due to the rehabilitation work done, which is not enough, however. The minister also suggested that the Tax Code of Russia be altered to account for the geological, economic and geographical conditions existing in the areas where oil is extracted and to allow for proportionate tax breaks to oil companies suffering loss.

Mikhail Kasyanov, the Prime Minister of Russia, other ministers, parliamentarians, the leaders of a number of oil companies and academics attended the meeting.