Page 93 - RusRPTDec19

Russia's largest oil company state-controlled ​Rosneft​ is lobbying for tax breaks for importing foreign equipment for extraction on Russian territorial and inland waters​, ​Kommersant ​daily reported on November 26 citingunnamedsources. Asreportedby​bneIntelliNews,​ Rosnefthasbeen pressing the ​government and the Kremlin for support for its Arctic assets​ and other tax benefits​. Now, reportedly, the influential head of Rosneft Igor Sechin has requested tax breaks (from excise duties and the VAT) for imported extraction equipment, which is opposed by the Ministry of Industry and Trade. Rosneft has only one significant project on inland waters - the Khatangsk Arctic field. Currently similar tax breaks have been put in place for imports of equipment for the extraction on offshore shelf. ​Kommersant s​ uggests that tax-free imports for inland projects could be a way to circumvent sanctions that currently target offshore shelf extraction projects.
The German parliament has failed to approve a bill amending its Energy Regulation to mitigate the potential negative effect of the new EU gas directive for the Nord Stream-2 gas pipeline​, Kommersant reports. The proposed amendments to the regulation suggested excluding the condition that only pipelines put into operation before 23 May 2019 might receive exemptions from the EU gas directive.
Russia is pumping record high levels of gas – almost 300mn cubic meters a day – across Ukraine to the EU​, Serhiy Makogon, director of Ukraine’s Gas Transit System, writes on Facebook. Makogon speculates the Gazprom is preparing for a January 1 cutoff of gas to the Ukraine pipeline by maximizing sales of pipeline gas today. In the event of a cutoff, Gazprom will have a maximum amount of gas in storage to sell in Europe. This would buy time for Russia to get Nord Stream 2 commissioned and delivering gas to Germany.
Rosneft CEO Igor Sechin has asked the government to exempt foreign equipment and the goods necessary to develop oil and gas fields in inland waters ​and territorial seas in Russia from customs duties and VAT, Kommersant reports. According to Sechin, a special customs regime, similar to that, which already applies to offshore fields, needs to be introduced for such fields. At the same time, the Ministry of Industry and Trade insists that customs duties and VAT relief only be provided to a limited list of goods if there are no Russian substitutes, the paper writes.
On 24 October, Minister of Finance Anton Siluanov, Deputy Prime Minister Dmitry Kozak and Deputy Prime Minister Yury Trutnev discussed tax reliefs for Arctic projects, including for Vostok Oil project, according to Kommersant. The government decided to provide the project with RUB600bn ($9.4bn) of tax relief over ten years under an oil price assumption of $60/bbl. The relief, in the form of a mineral extraction tax (MET) deduction, is to compensate the expenses for developing the infrastructure, which is required for hydrocarbon production at fields located (at least 50% share) on the Taymyr peninsula. The relief is effective under an oil price above the level set by the budget rule ($42.40/bbl). Rosneft might not be allowed to use the proceeds from the tax relief for a pipeline (from Vankor cluster to the North Taymyr) construction until it starts production at Payakha field, the paper writes
Russia is one of the most expensive places in the world to produce oil,
new analysis produced for Saudi Arabia’s state-owned oil giant Saudi Aramco
93​ RUSSIA Country Report​ December 2019 ​ ​www.intellinews.com