OREANDA-NEWS. February 6, 2009. Russian authorities are willing to consider tax support for domestic oil exporters, although they pledge to give preferences on a selective basis, on expectations that a weakening ruble will provide them with additional financial resources. Russian Energy Minister Sergey Shmatko said in an interview Thursday that the next step to prop up decreasing extraction volumes in the oil industry could be tax benefits that the government will review as early as February.

Well before the crisis the government was debating ways to encourage oil producers to boost production volumes using taxes, but the crisis has postponed the settlement of this issue. "We proceed from the fact that normal operating conditions are available today and that the oil industry should be encouraged, including by means of tax benefits, in order to expand their operations" – Shmatko said. In his opinion, devaluation of the ruble that has weakened since August's military conflict between Russia and Georgia by nearly 30% against the bi-currency basket is capable of giving benefits to oil companies.

"The effect…of the weakening ruble will certainly give Russian businesses some support, as this constitutes export activities…On the back of ruble depreciation ruble-denominated revenues of oil concerns are on the rise" – the minister said. Shmatko also sees disadvantages in the current situation. "We are confident that ultimately because of the weakening ruble companies will report a substantial increase in opex. This will be clear around the middle of the year" – he said. The energy minister said that taxes imposed on oil producers should be lowered depending on the specific company. "Today we mean that such incentives should be tapped primarily at greenfield deposits and remote fields. Businesses should make use of these incentives to revamp oil refining facilities" – Shmatko said.