LUKoil Chief Laments Loss Of Investment Cash To Tax

by Tatania Smolenskaya, Tax-News.com, Moscow

11 September 2006

LUKoil President Vagit Alekperov said recently that the government’s tax policy is holding back development of Russia’s oil sector. LUKoil is seen however as a Kremlin ally, and is likely to be in line to receive some of the spoils of the dismemberment of bankrupt Yukos.

“Current tax policy is as follows," said Alekperov: “Excessive profits are withdrawn from the oil and gas industry on the one side, but on the other side, no investment funds, which are vital to capital-intensive projects for the development of new resource-rich regions, have been created so far.”

The LUKoil president emphasized that the government had a right to the tax money; but rather contradictorily he said that Russian companies have sufficient technical and human resources to implement development programs on their own without needing investment from outside the country.

Maintaining a pro-government line, Alekperov said that Yukos deserved its fate, and said that his company had resolved its own tax problems in a dialogue with the authorites. He confirmed that LUKoil would consider buying some Yukos assets, particularly retail outlet networks.

He denied that there was a plan to absorb LUKoil into Rosneft or Gazprom: “At the moment, neither I, nor any of LUKoil's major shareholders have plans to sell our stakes.”

In July, one of LUKoil's subsidiaries, Naryanmarneftegaz, was hit with a US$1.5m (not billion!) VAT repayment claim. Curiously, company spokesman Dmitry Dolgov claimed that allegations made by the tax authorities were groundless, and said they were a political attempt to discredit the company.

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