Bloomberg News

VTB Picks Gazprom Neft, TNK-BP, Lukoil as Tax Forces Efficiency

July 12, 2012

OAO Lukoil, TNK-BP and OAO Gazprom Neft were named as VTB Capital’s top picks due to efficiency gains in response to Russia’s domestic tax policy.

“The Russian oil sector represents a good investment opportunity, despite investors’ appetite being dented by the perception that revenue-based Russian oil taxation is insufferably heavy,” VTB analysts led by Dmitry Loukashov said in a research note published today.

A high, revenue-based tax system combined with low corporate tax has provided incentives for oil companies to invest in efficiency, according to VTB.

The Russian government derived half of its income from oil and gas last year. That came mainly from Russia’s export duties on crude and products as well as extraction taxes, which are based on prices for Russia’s Ural’s crude export blend.

VTB named TNK-BP as Russia’s most efficient performer followed by Gazprom Neft.

To contact the reporter on this story: Stephen Bierman in Moscow at

To contact the editor responsible for this story: Will Kennedy at

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