Interfax cited Mr Alexander Novak energy minister of Russia as saying that the Russian government has decided to extend gas natural resource extraction tax concessions for fields in Yakutia, the Krasnoyarsk territory and Irkutsk region until January 1st 2022.

Mr Novak said that the concessions were originally due to expire on January 1st 2017. Since the decision to synchronize infrastructure and build pipelines for these fields has only now been made, there timeframe has been shifted until January 1st 2022.

TNK-BP made a request with the Energy Ministry for extending the break in the Krasnoyarsk Territory. The company said that with a 2006 decision to free up field development in initial stages in the Krasnoyarsk Territory from the NRET it was expected that oil transport infrastructure, which is necessary for field development would develop very quickly and, therefore, a 10 year break was seen as sufficient.

However, according to a ministry letter to the government which has been seen by Interfax owing to object organizational and economic difficulties in the implementation of infrastructural projects, the design and construction of the first section of the Zapolyarnoye Purpe system and the Kuyumba Taishet pipeline will reach completion in the fourth quarter of 2014 and the Q4 of 2016 respectively. As a result, fields in the Zapolyarnoye Purpe system's zone can only take advantage on the NRET break for one year while the Kuyumba Taishet zone will be completely untouched by the break.

In addition it is TNK BP's believed that the NRET break does not solve the entire issue of achieving returns on projects to develop fields in new oil and gas provinces. These projects also require a reduced export duty.

The Energy Ministry believed an integrated decision would be possible to extend the tax holiday on the NRET for new projects in Yakutia, the Irkutsk Region, Krasnoyarsk Territory, Nenets Autonomous District, some parts of the Yamal Nenets Autonomous District, the Russian section of the floor of the Caspian Sea, fields in inland sea waters and territorial waters, and continental shelf. At the same time, the level of resource depletion at fields should be 5% with minimum reserves at 5 million to 10 million tonnes. Based on realistic timeframes for the commission of these projects and the fact that production at the majority of them would start no earlier than 2016-2018, the ministry could set the maximum period for the NRET break until January 1st 2013 for fields where operators already hold licenses.

Source - Interfax

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