The Russian government, facing budget deficits due to low oil prices, may restructure taxes on crude to make up for the shortfall, Bloomberg reported.
Russia, which relies on oil revenues for about 50% of its revenues, has absorbed the global drop in oil prices for the last year, but is seeking to lower its exposure as prices seem poised to persist.
The new formula would increase taxes roughly 20% for oil producers, and would raise about $9b in additional revenue in 2016. Current taxes only charge about $15 per barrel of oil.
In a separate announcement, Moody’s ratings agency noted that Russian oil producers have shown a strong resilience to the low oil prices, mainly due to favorable tax rates.
“As we expected, changes to Russia’s taxation mechanism on the oil sector at the start of 2015 are cushioning domestic companies within the sector from the effects of lower oil prices,” says Julia Pribytkova, a senior analyst at Moody’s.”
Even though global prices have been depressed, some companies—such as Russia’s Lukoil—have seen profit increases, generally understood to be cushioned by the Russian government.