New Russian Tax Credits Encourage Arctic Oil Exploration

Russian President Vladimir Putin has signed off a new law on mineral extraction tax incentives for hydrocarbons produced in Yamal and the Nenets Autonomous District, reports official news agency Arctic-info.

The document [signed] also refers to the resources that are extracted in Eastern Siberia, the Sea of Japan, the Gyda Peninsula and the Bazhenov Suite. According to the official online portal of legal information, the law was signed on June 28, 2014.

A tax rate of 15% is set for hydrocarbon raw materials produced on new marine deposits.

For a number of fields, the law introduces a zero rate of mineral extraction tax. In particular, for oil fields in Yakutia, the Irkutsk and Krasnoyarsk regions it will remain in effect until a level of oil production of 25 million tonnes is achieved.

In the Nenets and Yamalo-Nenets Autonomous Districts the zero rate of mineral extraction tax will be applied up to the production level of 15 million tonnes.

The zero rate will only be applied to fields, where stock does not exceed 0.05% by early 2015, development of such deposits should commence no later than 2022.

In the Yamalo-Nenets Autonomous Region there are 234 hydrocarbon deposits, of which 66 are under commercial development and 19 are ready for use. Geological exploration is underway at 149 deposits.

Elsewhere, one of the largest gas fields beyond the Polar Cicle is the Yurkharovskoe gas condensate field which was opened in 1970. The area of the field is approximately 260 square kilometres, and it provides around 10% of the gas consumption of the domestic market. The volume of production at full design capacity is 33 billion cubic metres of natural gas per year.

Source: Arctic-info