A tax regime for the Kara Sea oil and gas project should proceed from the huge investment and high risks the project involves to guarantee profit, the vice president of Russia's oil giant Rosneft, Peter O'Brien, said during an interview on Russian radio on Tuesday.
On Friday, Rosneft struck a major share swap deal with BP and agreed to jointly develop the Arctic shelf. Later in the day Russian Prime Minister Vladimir Putin told the BP management that "the Russian government intends to create a most favorable tax and administrative regime to develop the project."
"We need a new tax regime based on profit," O'Brien told the Ekho Moskvy radio station. "The word privileges appalls me, we are not disabled. We just want to be able to face our shareholders and tell them that it is an economically sound project."
O'Brien said such a tax regime could also be applied to other projects on the Arctic shelf. On Monday, O'Brien said the two oil giants planned to start drilling in the Kara Sea in 2015.
In 2006, Rosneft and BP signed a memorandum to develop the Arctic shelf but have not developed any projects there. Currently, Rosneft and BP are jointly developing the Sakhalin shelf in Russia's Far East.
O'Brien and Jeremy Huck, head of BP in Russia, also told Ekho Moskvy that their companies did not fear any possible risks for their Kara Sea project from former Yukos owners.
In the early 2000s, Russian authorities accused Yukos, then Russia's largest oil company, of economic crimes. The company was declared bankrupt and its assets auctioned off to Rosneft.
"I don't see any reason to worry," O'Brien said, adding that international lawyers had verified all the deals on the purchase of former Yukos assets.
Huck said the Yukos assets story was more of a matter of politics than business, and added that BP had signed the deal with Rosneft and assumed possible risks as a shareholder.
MOSCOW, January 18 (RIA Novosti)