Anatoly Yankovsky, the director of the Industry and Energy Ministry's fuel and energy department, said a working group to analyze and rectify the situation has been created and includes representatives from major oil producers like LUKoil, TNK-BP, Sibneft, Slavneft, Surgutneftegaz, Yukos, Rosneft, Transneft, Tatneft and Bashneft.
The group will determine the main factors causing the slowdown in oil extraction.
"One of these factors is the current system of taxation in the oil industry, particularly the export tariff and the severance tax," Yankovsky said.
He suggested that taxation be reviewed as related to the oil sector, so that exporting crude oil and refining it for the domestic market would be equally profitable for oil companies.
He also proposed making the severance tax less dependent on the dynamics of world oil prices.
"This means that the cost of raw materials that are delivered to an oil refinery will not automatically increase if the crude oil price rises," Yankovsky said.
He added that it was possible to introduce reduction factors for the severance tax depending on the development stage, the site and development conditions in order to trigger the exploration of new fields and hard to recover resources.
Yankovsky also said a lack of incentives for oil ventures to accelerate production and the growing tax burden led to a recent decline in the average daily extraction of oil.
According to the ministry, Russian oil production grew by 2.7 % in the first half of this year, compared to the same period last year.
Average annual growth aggregated 14 % from 2000-2004.
