Lukoil Close to Caspian Sea Tax Break Deal

Russian private oil major Lukoil is close to winning tax breaks from the Russian Government for developing its Caspian Sea oilfields, according to Russian media.

The tax breaks will allow the company to save up to $460m in taxes in 2011, according to business newspaper RBC Daily.

The paper, which quoted industry sources, said Lukoil had reached a preliminary deal with the Finance Ministry that its oil production in the Caspian Sea would have lower export duties.

The system of tax breaks will be similar to an earlier scheme for East Siberian fields where producers pay 45% of regular export duties when the price of crude exceeds $50 per barrel.

Lukoil spokesman Dmitry Dolgov said tax-break talks continued after the company asked the government to lower taxation for Korchagina and Filanovskogo, its two key deposits in the Caspian Sea, reports Reuters.