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Russia’s Oil Giants Are Addicted To Tax Breaks

For much of the 2010s, Rosneft was the leading force on the Russian domestic crude market. It is one thing to produce 42-43 percent of Russia’s crude production, indubitably noteworthy in and of itself, yet Rosneft also wielded significant political power, being able to proactively shape the country’s energy policy (whilst other majors were mostly in a spectator’s position). Recent moves might indicate that Rosneft’s power might be curbed politically as government officials tire of its one-off tax exemptions and constant haggling overproduction terms, apparently so much that President Putin needs to get involved.

Rosneft’s firm political backing allowed the company to get away with several fiascos – just recall the 2016 “privatization” of Bashneft (in the end the tender did not take place and the government simply passed the majority stake in Bashneft onto Rosneft) or the subsequent auctioning of a 19.5 percent stake in Rosneft itself which saw the Chinese CEFC, holding 14.2 percent of Rosneft in 2017 go bankrupt and transfer its stake to the Qatari investment fund QIA under remarkably murky circumstances. These brought about no repercussions, although Rosneft was manifestly more cautious in 2018-2019, with the CEO Igor Sechin repeatedly claiming that from now on the company would focus on “organic growth”, i.e. no more hostile takeovers.

With the repartition of the Russian oil market no longer…




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