Russia’s Energy Minister Alexander Novak said that the country is ready to build up its unfinished oil wells to regain or even increase its oil market share after the recovery of oil demand.
Moscow has worked out a program of unfinished oil wells scheduled to operate once the production cut agreement with the Organization of Petroleum Exporting Countries (OPEC) finishes in 2022.
The number of unfinished wells is estimated to be 2,700.
Total spendings by oil companies are expected to be between RUB300-400 billion (USD3.9-5.25 billion). According to the minister, to boost participation, the government considered offering three-year tax breaks for firms engaged in the program from early 2022, which could amount to RUB32 billion (USD420.4 million).
Novak added that banks are planned the funds, under guarantees by the state bank VEB. He estimated that once the wells are operating, the budget would regain RUB1.15 trillion (USD15 billion).
The minister also said that a similar concept could be applied to the gas sector.
However, according to some sources, the plan first announced in May had stalled over the disinclination of the finance ministry to provide funds as there is a more urgent need to address the economic impact from coronavirus on Russia.
The finance ministry has not responded to a request for comment.
Previously last week, the ministry stated that there were discussions over ways to support oil firms without using the state budget or sovereign wealth fund as sources of financing.
