Date: 13 April 2020

Small Russian Oil Firms Ask Prime Minister for Help

Deprived of both big resources and state aid, small oil companies are more affected by plummeting oil prices worldwide, which prompted them to call the government for help. Thus, Elena Korzun, the director general of Assoneft, an independent association of the Russian Federation oil and gas industry, sent a letter on behalf of them to the country’s Prime Minister Mikhail Mishustin.


“We hereby ask the government of the Russian Federation to offer oil and gas companies, whose total output did not exceed 500,000 tons throughout 2019, a mineral extraction tax deferral, either for March-May 2020 or until a barrel of oil hits the price of $40 on average once a month,” the letter said. According to statistical data, these firms had a combined oil output of 10 million tons back in 2019. Independent oil companies are meant to explore and drill oil and gas condensate to meet the needs of the domestic market. As they lack their own refineries, such firms have a limited room for maneuver for selling their output, especially with a current slump in global oil prices.

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“The income of the companies is falling sharply due to the collapse of world oil prices and a demand slip, also amidst the coronavirus outbreak,” Korzun wrote in the letter, adding that “most independent oil companies lack money to settle their trades, loans or taxes.” Assoneft says independent oil companies have modest capacities to store oil and are practically unable to sell crude volumes once the market situation gets better. Most of these firms will be struggling to meet their tax obligations. Also, small petroleum companies will permit delays in settlements with their suppliers. The same is with loans as these are quite large as the firms carry out exploration and production drillings while they are facing restrained resources. The independent association of Russian oil and gas companies has asked the government for help as many energy companies are now on the brink of collapse. According to its website, the association unites 53 private oil and gas producing companies involved in oil export and production.

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