Zero Hedge — Goldman Busts The Narrative: The New Oil Order Is "Blessing In Disguise" For Russia

What would be the outcome of potential tax reform?

We estimate such reform could lead to the following: (a) upstream profitability would substantially increase, driving up the earnings of Russian oil companies; (b) Russia would produce more oil – its vast onshore and offshore oil resources would become commercial to develop, giving a boost to accelerated production growth; (c) export refining would become loss-making and hence refining volumes would decline. Total refining throughput could decline to as much as needed to supply products to the domestic market. Under the current regime, we estimate that potential oil products export could decline up to c.50% from 2014 to 2020 (from c.3 mnbpd to c.1.5); (d) domestic oil product prices could rise by 30%, on average, from current levels, as indirect subsidy through export duties would be eliminated; (e) unconventional and offshore exploration would pick up, as profitability would improve substantially, making those areas particularly interesting for investment.

Zero Hedge
Goldman Busts The Narrative: The New Oil Order Is "Blessing In Disguise" For Russia