Russia's Energy Ministry, Rosnedra prepare proposal on financial, economic model to incentivize developing hard-to-recover reserves

KHANTY-MANSIYSK. Aug 30 (Interfax) - Russia's Energy Ministry and the Federal Subsoil Resources Management Agency (Rosnedra) have prepared a proposal on a financial and economic model to incentivize developing hard-to-recover reserves, Vladimir Yakushev, Plenipotentiary Envoy of the Ural Federal District, said during a meeting on the matters concerning the oil and gas industry in Khanty-Mansiysk.

Yakushev noted that a critical mass of complications has been accumulating for a long time regarding hard-to-recover reserves, and "an active movement began in terms of the regulatory framework" back in 2019.

"Some mechanisms have already shown their effectiveness, and these are field test sites and tax on additional income from hydrocarbon production. The improvement work has not finished. The authorities are concerned about the further development of hydrocarbon reserves, because we are talking about social issues. A large number of people work on producing oil and gas assets, and it is important to find incentives for developing fields," Yakushev said.

"The proposal that the Energy Ministry and Rosnedra have formed on preparing a universal financial and economic model for hard-to-recover reserves deserves attention. We will exchange positions on the proposal in the process. Taking a decision at the federal government level will probably be somewhat difficult. However, it also seemed that the matter to promote tax on additional income from hydrocarbon production would not be resolved when we were dealing with it," Yakushev added.

Khanty-Mansiysk Autonomous District (KhMAD) Governor Natalya Komarova noted during the meeting that the region supports the proposal prepared by the Energy Ministry and Rosnedra.

"Many fields in the KhMAD are at the late stages of development, and they require special models for designing further development. At least 116 fields are water-flooded at 90% in the region, and 242 explored fields are not involved in development, thus they require a special approach and the creation of infrastructure that affects the depletion plan. In this regard, we support the initiative of the Energy Ministry and Rosnedra to create a universal financial and economic model," Komarova said.

"We propose utilizing our capabilities to form the decision, because it will not be simple. The model in our opinion [allows] as reliably as possible to assess the possibilities of each field, and to create conditions for taking decisions on taxation of a particular field. This is also the important role of the approach, which could specifically create conditions for assessing the effect of developing the municipality, the region, and the country's economy as a whole. If we start a public discussion of the opportunities today, then it would be extremely useful for everyone," Komarova said.