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adjacent Valemon field. It will also gain interests proposals are generally aimed at increasing
in the infrastructure used to transport the fields’ the tax burden, it has also called for greater tax
output. breaks to be provided to Rosneft’s Priobskoye
Production at both fields is in decline. Even and Vankor oilfields. The latter will play a key
so, PGNiG says the transaction will enable it to role in the company’s Vostok Oil megaproject in
boost its output in Norway by 45% to 0.9 bcm the Russian Arctic.
in 2021 versus the level last year. It expects to
On September 21, net 0.2 bcm in annual gas supply from the fields If you’d like to read more about the key events shaping
PGNiG said it had between 2023 and 2028. the former Soviet Union’s oil and gas sector then please
click here for NewsBase’s FSU Monitor.
agreed to take a If you’d like to read more about the key events shaping More talk of carbon-neutral LNG as over-
Europe’s oil and gas sector then please click here for
6.45% interest NewsBase’s EurOil Monitor. supply continues
in Norway’s Russian tax overhaul The idea of carbon-neutral LNG is being talked
about with increasingly frequency, although
Kvitebjorn field Russia’s Finance Ministry has submitted several it accounts for only a miniscule fraction of the
bills to the State Duma that would radically over-
LNG market to date.
Six cargoes of LNG that can be described as
and a 3.225% haul the country’s oil taxation system, largely at a carbon-neutral have been traded to date. Four of
cost to producers.
interest in the The ministry has proposed changes to the these were cargoes sold by Royal Dutch Shell that
adjacent Valemon excess profits tax (EPT) regime introduced last involved full-lifecycle carbon offsets, one was a
year, which it previously said had caused a loss of partial offset by Japan’s JERA and there has also
field. over $3bn to the budget. It has also called for the been a tender by Pavilion Energy for offsets up to
removal of tax breaks at specific projects, moving the point of delivery.
some of those fields to the EPT regime instead. Earlier this month, carbon-neutral LNG
As analysts note, the changes appear to go was discussed at the Gastech Virtual Summit,
further than simply increasing oil industry tax where speakers noted that the growing appe-
revenue. Rather, they seem aimed at streamlin- tite for offsetting emissions from the fuel would
ing Russia’s excessively complex oil tax regime. raise its costs. However, such an increase in the
Generally, though, the impact will be nega- price of LNG would come at a time when low
tive for oil producers, while gas producers are natural gas prices are key to displacing com-
unaffected. Gazprom Neft will be hit hardest, peting fuels, including coal, and to penetrating
losing up to 21% of its EBITDA if the ministry’s emerging, price-sensitive markets in Asia. As
proposals are adopted. Tatneft might lose 20%, a result, the industry would need to be careful
while Lukoil’s earnings could lose 8%. to balance decarbonisation with remaining
However, Russia’s biggest oil producer Ros- cost-competitive.
neft will fare relatively well from the many Wood Mackenzie’s principal analyst for
changes. Not only this; while the ministry’s Asia-Pacific gas and LNG, Lucy Cullen, told

P14 www. NEWSBASE .com Week 38 24•September•2020