Fitch: tax rise for Russian oil companies to reduce drilling volumes in Russia

​The rise of the tax burden on the oil and gas sector might reduce the volumes o drilling in 2016.

According to Fitch, tax rise for oil companies might reduce their operational monetary flow and that will lead to the reduction of drilling at mature deposits.

A higher MET for Gazprom will not lead to the instant consequences for the company’s credit characteristics and EBITDA in 2016 will fall by 5% only, less than Fitch previously expected. However, Gazprom is likely to cut its investment program of capital expenditure  in 2016.

The influence on tax burden on oil companies will be less evident. Oil companies of Russia with the most developed technological chain might reduce EBITDA in 2016 by 7-10% at the Brent oil price of $55/barrel. In case of the same export duty for oil at the level of 2015, capital expenditure of oil companies will have to be reduced again in 2016.