Development of economic incentives the use of enhanced oil recovery methods on the example of ASP technology
Resources exploration can rarely be cost effective when it comes to hard-to recover reserves or reserves with high level of water cut and strong degree of depletion due to significant expenses it extraction requires. The reason behind lies not only in extremely high operational and capital expenditures that company bears while realizing such technology intensive projects, but in lack of governmental policy effectiveness in terms creating feasible tax regulation system stimulating resources exploration as well. Nevertheless existing tax legislation in Russia considers various fiscal preferences both on federal and regional level as a matter of actual practice it doesn’t create any forceful stimuli for companies to develop unprofitable reserves. It seems that the practice of providing tax preferences depending on the geologic and technical peculiarities of the object under developing makes current tax relief system in Russia encouraging difficulties with oil recovery and not implementation costly technologies, which could intensify reserves recovery. Nowadays technologies based on chemical agents’ injection grow in popularity due to their ability to enhance oil recovery. Being one of the most promising and advanced methods of this kind in practice ASP-technology seems to be not economically viable for Russian license holders at all. The reason lies in the fact that implementation of this method requires significant capital and operational investments which are not the trigger for providing fiscal preferences in terms of Russian tax relief system regulating oil extraction sector. This paper aims at developing economically justified suggestions in order to improve the existing tax legislation in Russia. Basing on the example of company «Salym Petroleum Development» and its operational experience with intensifying oil recovery on Zapadno-Salymskoe production field the amount of tax concession mechanisms were formed. The argued variants can supposedly become the sound background in creating efficient stimuli for large-scale implementation of ASP-technology as well as any other expensive innovative technology by Russian oil producers.