Washington (Platts)--10May2011/830 am EDT/1230 GMT

Bracing for a fight on Capitol Hill over oil company tax breaks, ExxonMobil's top lobbyist on Monday said the US tax code already penalizes drillers and refiners.

Ken Cohen, vice president of public and government affairs, added in a conference call that scrapping some of the current deductions would jeopardize future US production.

"I would not discount the political theater that will play out," he said. "Frankly, we are an attractive target -- irresistible right now for politicians to wail away."

The Senate Finance Committee invited executives of top oil and gas companies to testify Thursday about a proposal to end $4 billion in annual tax incentives to the sector. In recent weeks, President Barack Obama and Democrats in Congress have pointed to high gasoline prices and soaring first-quarter profits to renew their attempts at dropping the subsidies.

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Cohen said ExxonMobil paid $3.1 billion in US taxes and collected $2.6 billion in profits in the first quarter. Globally, it paid $28.2 billion in taxes and made $10.7 billion in profit on revenue of $114 billion.

He said the company cannot make long-term investments if it does not know what tax burdens it might face from quarter to quarter and year to year.

"The energy you are using today is the result of investments we made, in some cases, two decades ago," he said. "We take the market risk, but what we ask policy-makers to do is be consistent in the application of their rules."

Senator Max Baucus, Democrat-Montana and chairman of the Finance Committee, has targeted the top five oil and gas companies in a proposal seeking to end their manufacturing deduction, to reduce the tax credit for royalty payments to foreign governments and to impose an excise tax on certain Gulf of Mexico leases.

Jaime Spellings, ExxonMobil's general tax counsel, said the current tax code already cuts the value of the manufacturing deduction available to the oil and gas sector by a third, compared to what companies can claim, for example, in the fishing, farming or mining industries.

"So if everyone else gets a 9% manufacturing deduction, we get a 6% manufacturing deduction," he said.

Spellings added that oil producers can claim percentage depletion up to 1,000 b/d, while other energy sectors face no limits.

"You could get a coal percentage depletion worth $100 million a year, but you're never going to get an oil and gas percentage depletion deduction that's more than a million and a half," he said.

--Meghan Gordon, meghan_gordon@platts.com