12 May 2020 19:46

Rosneft asks Russian govt to offer equal conditions to all market participants for hard-to-recover gas reserves

MOSCOW. May 12 (Interfax) - Rosneft is asking the Russian government to provide all market participants with equal conditions in order to develop complex gas reserves, a company representative told reporters.

"We are not talking about any exclusive privileges for the company, but only about equal conditions for all market participants for the extraction of hard-to-recover gas reserves," the Rosneft representative said.

"When calculating the tax on the extraction of natural gas, the Tax Code stipulates a ratio depending on the complexity of developing reserves. For example, a ratio of 0.21 is stipulated in the first year of development for the costly gas production of the Turonian deposits as well as even for the cheap extraction of gas of the Cenomanian deposits in Yamal," the company representative said.

"Meanwhile, such ratios were not established for the Berezovskaya formation deposits, which require complex and expensive technical solutions in the production process, owing to the lack of projects to develop such deposits at the time the law was adopted in 2013," the source said.

"At the moment, this is holding back Russian companies from investing in the extraction of gas from the Berezovskaya formation," the Rosneft representative emphasized.

RBC newspaper previously reported that Rosneft CEO Igor Sechin had asked Prime Minister Mikhail Mishustin to provide the company with tax incentives for hard-to-recover gas deposits of the Berezovskaya formation in West Siberia. The potential resources at the Berezovskaya formation within Rosneft's sections alone amount to 1.3 trillion cubic meters of gas as indicated in the document. The company has already developed production technology and received gas inflow at three fields.

The main recipient of the incentives could be one of Rosneft's largest new gas projects, the Kharampurskoye field in the Yamalo-Nenets Autonomous District that the company is developing jointly with BP, which controls 49% of the project, the Russian state-owned company's CEO said in a letter.

There are plans to produce oil at mature fields and implement a gas production project as part of the Rosneft and BP Kharampurneftegaz joint venture. The development of the Cenomanian deposit should result in production of more than 10 billion cubic meters. The launch of the project has been postponed a year until 2021. There is potential for a further increase in gas production via the development of the Turonian deposit, which should more than double the total production volume.

Rosneft in its annual report said that a technology was developed in 2019 for the extraction of hard-to-recover dry gas reserves from the low-permeability siliceous opokamorphic reservoirs of the Berezovskaya formation. In 2019, according to the results of well testing in the section of the Berezovskaya formation, the increase of recoverable gas reserves of category B1C1+B2C2 totaled 30.5 billion cubic meters.