Russian ministries, subsoil users looking at how to administer incentives for hard-to-recover gas reserves; final decision in autumn - dep finance minister

CHOLPON ATA. Aug 7 (Interfax) - The Russian finance and natural resources ministries as well as federal subsoil resources agency Rosnedra are, together with subsoil users, looking at ways to administer incentives to develop hard-to-recover reserves (HRR) of gas, Deputy Finance Minister Alexei Sazanov told Interfax.

"We're currently looking at how to administer them. We want to ensure that the incentives apply not to ongoing production, but to further production, meaning new wells. We'll set the parameters once we have a general idea of how we can administer this new production. There'll be separate productive formations for separate reservoirs. Economic models for these will be analyzed. I think we'll finalize all this in the autumn," he said.

Sazanov also said new incentives for oil HRR were not being discussed.

"We usually say we are only willing to consider [extending] excess profit tax incentives [to new targets in] the fourth group. "I know companies have submitted models, and my colleagues are looking at them. I think we'll reach some decisions this fall - this is quite possible if we come to an agreement with businesses and the Energy Ministry," he said.

The fourth group includes resource blocks located north of 65 degrees latitude, wholly within the boundaries of the Komi Republic or located completely or partly in Tyumen Region, the Khanty-Mansiysk and Yamalo-Nenets autonomous districts, Komi, Orenburg Region, Samara Region or Tomsk Region. The degree of oil reserves depletion at a block must be less than 0.05 or equal to 0.05 (as per the state registry as of January 1, 2017 or January 1, 2019), and it must have initial recoverable oil reserves of less than 45 million tonnes (as per the state registry as of January 1, 2017 or January 1, 2019).

The Finance Ministry said earlier that 75 EPT fourth group blocks had been identified during the analysis period in 2019-2023. The produced 9.5 million tonnes or 1.8% of Russia's oil and gas condensate in 2023.