Govt extends tax breaks Yakutia, Krasnoyarsk, Irkutsk gas fields to 2022
GORKI. Sept 24 (Interfax) - The Russian government has decided to extend gas natural resource extraction tax (NRET) concessions for fields in Yakutia, the Krasnoyarsk territory and Irkutsk region until January 1, 2022, Energy Minister Alexander Novak told reporters following a meeting with Prime Minister Dmitry Medvedev.
The concessions were originally due to expire on January 1, 2017.
"Since the decision to synchronize infrastructure and build pipelines for these fields has only now been made, there timeframe has been shifted until January 1, 2022," the minister said. TNK-BP made a request with the Energy Ministry for extending the break in the Krasnoyarsk Territory. The company said that with a 2006 decision to free up field development in initial stages in the Krasnoyarsk Territory from the NRET, it was expected that oil transport infrastructure, which is necessary for field development, would develop very quickly and, therefore, a 10-year break was seen as sufficient. However, according to a ministry letter to the government, which has been seen by Interfax, owing to object organizational and economic difficulties in the implementation of infrastructural projects, the design and construction of the first section of the Zapolyarnoye-Purpe system and the Kuyumba-Taishet pipeline will reach completion in the fourth quarter of 2014 and the fourth quarter of 2016, respectively. As a result, fields in the Zapolyarnoye-Purpe system's zone (northern Yamal-Nenets Autonomous District and the Krasnoyarsk Territory) can only take advantage on the NRET break for one year while the Kuyumba-Taishet zone will be completely untouched by the break.
In addition, it is TNK-BP's believes that the NRET break does not solve the entire issue of achieving returns on projects to develop fields in new oil and gas provinces. These projects also require a reduced export duty, the company said.
The Energy Ministry believes an integrated decision would be possible to extend the "tax holiday" on the NRET for new projects in Yakutia, the Irkutsk Region, Krasnoyarsk Territory, Nenets Autonomous District, some parts of the Yamal-Nenets Autonomous District, the Russian section of the floor of the Caspian Sea, fields in inland sea waters and territorial waters, and continental shelf (excluding projects with production commencing after January 1, 2016 and under special tax breaks). At the same time, the level of resource depletion at fields should be 5% with minimum reserves at 5 million-10 million tonnes. Based on realistic timeframes for the commission of these projects and the fact that production at the majority of them would start no earlier than 2016-2018, the ministry could set the maximum period for the NRET break until January 1, 2013 for fields where operators already hold licenses.