Page 123 - RusRPTOct20

9.1.1b​ Oil and gas sector news
Denmark has granted an operating permit to Nord Stream 2, ​Vedomosti reports. As a result, Nord Stream 2 now has permissions to operate from all countries in whose territorial waters it is located. The construction of Nord Stream 2 has not been resumed after it was halted at the beginning of the year, although recent reports have indicated that pipelaying vessels, which could be used for its construction are moving closer to the construction site. We remind readers that the launch of Nord Stream 2 would allow the company to save some $1.4bn (or c. 5% of 2023F EBITDA, when we assume the full-scale launch of the pipeline) due to lower transportation costs than on the current route. Therefore, we treat the news that the last permit has been received as positive for Gazprom.
The State Duma approved the oil tax amendments at the second reading
September 29. The third and final reading is scheduled for today, 30 September. The draft law passed the second reading with the amendments which were released on September 29.
Amendments to suggested tax changes are somewhat positive for Tatneft​ and​ ​Gazprom​ Neft. ​Tatneft and Gazprom Neft might get RUB1bn of support per month, according to the new version of the amendments to the tax code presented by the State Duma’s budget committee.
Monthly MET relief of RUB1bn to be provided to assets in Tatarstan... Oil fields located in Tatarstan are going to be able to receive MET relief of up to RUB1bn ($13.5mn) per month if the Urals price is above the budget rule level ($43.40/bbl for 2021). The MET relief is only to be provided in compensation for actual expenses related to safety and the environment, and to viscous oil production. Additionally, the proposed tax break is only applicable to subsoil areas with initial reserves above 2.5bnt as of 2016. We believe this tax relief might only be applied to Tatneft’s largest asset, i.e. the Romashkinskoye field. However, we do not know whether the company produces high-viscous oil at this field. The overall tax break is capped at RUB36bn, but is not limited in time.
...and to Novoportovskoye. Second-group EPT fields in certain regions of the Yamal peninsula might get a similar tax relief. We believe that Gazprom Neft’s Novoportovskoye is the only such field. In order to receive the tax break, the company would have to conclude an agreement with the Ministry of Finance, committing to a certain level of production and investments in 2021-23. The overall tax break is again capped at RUB36bn. The tax break is also contingent on the Urals price, which must exceed the level set by the budget rule.
123 ​RUSSIA Country Report​ October 2020 ​ ​www.intellinews.com