Russian Duma passes law on zero tax for gas to produce ammonia and hydrogen throughout Arctic

MOSCOW. Oct 22 (Interfax) - The Russian State Duma passed an amendment to the Tax Code at second and third readings on Monday to usher in zero mineral extraction tax or MET for gas produced in the Arctic zone and used in the production of ammonia and hydrogen along similar lines to the MET rate that applies to gas produced on the Yamal Peninsula.

Gas produced on the Yamal Peninsula is not currently subject to MET from January 1, 2012 until 12 years have passed since the sale of the first LNG cargo. This concession applies to gas used to produce LNG, ammonia or hydrogen, in subsoil areas located entirely or partially on the Yamal and Gydan peninsulas in the Yamal-Nenets Autonomous District.

A similar concession has applied to gas production in subsoil areas located in the Arctic zone since April 1, 2020, if the gas is used for LNG production or as petrochemical feedstock.

The amendment passed on October 22 proposes that MET should not be charged on gas produced in the Arctic zone and used for the production of ammonia and hydrogen. The Arctic zone includes subsoil areas entirely north of the Arctic Circle, entirely within the boundaries of the Arkhangelsk Region, the Nenets Autonomous District, Komi Republic, the Yamal-Nenets Autonomous District, Krasnoyarsk Territory, Sakha Republic (Yakutia) and Chukotka Autonomous District.

The zero MET on gas to produce ammonia and hydrogen on the Yamal and Gydan peninsulas was introduced in 2023. Novatek planned to take advantage of the measure.