• Wednesday, 16 May, 2012

Minister in 'fiscal fillip' for Shtokman

Counting rouble costs: on Shtokman

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By Steve Marshall and news reports

 26 January 2012 10:25 GMT

A Russian minister this week gave a ray of hope to foreign partners in the Gazprom-led Shtokman consortium seeking tax breaks from the Moscow government before deciding whether to invest in the costly gas field project in the Barents Sea.

A final investment decision on the first phase of the Arctic offshore field development – now estimated to cost more than $20 billion – has been postponed until at least 1 April as partners in the Shtokman Development consortium remain divided over commercial terms.

Statoil of Norway and France’s Total, which hold a combined 49% stake in the consortium, are holding out for tax concessions from the Russian government that they claim are necessary to make the project economically viable.

Fuelling optimism, Russia’s Deputy Natural Resources Minister Denis Khramov was reported as saying by Norwegian newspaper Stavanger Aftenblad on Thursday that the country’s tax regime for the petroleum sector was in need of reform.

“The challenge is to make Russian hydrocarbons competitive, but that is not possible under today’s system. Therefore, a new [tax regime] needs to be put in place,” he said on the sidelines of a Norway-Russia oil and gas conference in Oslo.

The head of Statoil’s operations in Russia, Jan Helge Skogen, welcomed the minister’s comments, saying “a new tax system could give us new opportunities”, both at Shtokman and possibly other future projects in the country’s Arctic region where the company is keen to expand its activities.

However, he added: “We do not know how a new tax system will suit us.”

Reiterating Statoil’s position on the current financial framework for investing in Shtokman, Skogen said: “As it stands at the moment, it is not commercially justifiable.”

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