MinFin opposes Energy Ministry approach to gas NRET formula
MOSCOW. Nov 20 (Interfax) - The Russian Finance and Energy Ministries have differing takes on how to create a formula for the natural resources extraction tax (NRET) for gas, Deputy Director of the Finance Ministry's Tax and Customs Tariff Policy Department Alexei Sazonov said.
The Finance Ministry does not understand the Energy Ministry's approach, which envisages a formula that does not account for revenues from the sale of components contained in deep-seated gas formations, he said.
In its formula, the Energy Ministry accounts for the economics of developing separate gas layers - Cenomanian, Valanginian, etc. However, the paradox then arises that Valanginian, 'wet' gas contains a substantial amount of valuable components that are more expensive than gas ('wet' gas often contains gas condensate, natural gas liquids (NGL) and dry stripped gas); however, for some reason the formula does not account for these revenues, Sazonov said.
Deputy Finance Minister Sergei Shatalov previously said that his ministry expects to develop a unified formula for the gas NRET in December.
According to Shatalov, the ministries have varying approaches to calculating the formula. The Energy Ministry wants to have separate accounting for gas and condensate, while the Finance Ministry wants a formula that applies to an entire project, without dividing up gas and condensate.