Russia's Putin approves tax breaks that will encourage use of hydraulic fracturing.
af.reuters.com
MOSCOW, May 3 (Reuters) - Russian Prime Minister Vladimir Putin on Thursday approved a package of stimulus measures to unlock vast untapped unconventional oil resources in Western Siberia that could boost Russian oil production by up to 2 million barrels per day.
The proposals would encourage investors in Russia, whose status as the world's top crude producer is threatened by falling conventional output at Soviet-era fields, to expand use of costly hydraulic fracturing and other chemical enhanced recovery methods.
"Fracking," which brought a boom in U.S. unconventional oil and gas output, is already in use at some fields in Western Siberia, the Soviet-era oil heartland, but has yet to open up the so-called tight oil targeted in the proposals.
"This will open a second life for Western Siberia. The impact on Russian oil output will be very significant," Deputy Energy Minister Pavel Fedorov said after Putin signed a decree ordering the government to refine the package of stimulus measures by Oct. 1 and turn them into legislation.
"The potential is pretty substantial from learning how to produce from tighter formations. There is a grey area between tight rock formations and formations in west Siberian regions which produce today."
The centrepiece of the package is a sliding scale of tax breaks for investors in tight oil which would grant a discount of 50 to 100 percent on mineral extraction tax depending on the permeability of the rock.
"We have to send a clear signal to both domestic and international companies, to stimulate them to work in such a difficult - but at the same time prospective - sector," Putin said, citing estimates that the measures could yield up to 2 million bpd in additional output over time.
[snip]
====
So fracking OK with Putin if Russians do it, but it would an environmental disaster if Western
Europeans should attempt it. |
