Putin ratifies protocol on reduced mineral extraction tax as of 2024 for Russian JV between Zarubezhneft and Petrovietnam

MOSCOW. Dec 19 (Interfax) - Russian President Vladimir Putin signed into law the ratification of the protocol to the intergovernmental agreement between Russia and Vietnam in the oil and gas sector, which provides a preferential mineral extraction tax rate (MET) to Joint Company Rusvietpetro LLC (a joint venture between Zarubezhneft and Petrovietnam ).

The corresponding document was published on the official legal information portal.

The amendments say that, when calculating the mineral extraction tax for Rusvietpetro from the beginning of 2024 to the end of 2028, a coefficient of 0.41 will apply, and from the beginning of 2029, the coefficient will be 0.6. The benefit applies to two blocks of the Central Khoreiverskoye Uplift in the Nenets Autonomous District: No. 3, which includes the Khosedayuskoye-West, Sikhoreyskoye, East Sikhoreyskoye and North Sikhoreyskoye fields, and No. 4, consisting of the North Oshkotynskoye, South Syurharatinskoye, Urernyrdskoye and East-Sikhoreyskoye fields, as well as the Yanemdeyskoye fields.

During the discussion of the bill in the Russian State Duma, Deputy Energy Minister Anastasia Bondarenko explained that the introduction of the preferential coefficient was due to the termination of other tax breaks following changes in Russian legislation.

"In this connection, the economics of the Rusvietpetro project have deteriorated significantly. This, despite the fact that the economics of the Russian project in Vietnam [Vietsovpetro, another joint venture of Zarubezhneft and PetroVietnam] continue to benefit from the high level of support provided by the Vietnamese government," Bondarenko said.

During the bill's introduction to the State Duma, the documents showed that its adoption could result in lost Russian budget revenues of 202.6 billion rubles.