The lower chamber of Russia's parliament, the Duma, has rubber-stamped a new set of tax privileges for Rosneft after the country’s largest oil producer lobbied government for an increase on returns on investments in deep gas reservoirs.
According to an amendment approved by the Duma, the company will now enjoy a reduced rate of gas production tax on output from so-called Berezovskaya Svita layers at assets in West Siberia.
Rosneft looks set to be required to pay just one-fifth of the standard gas production tax, which is usually subject to regular adjustments to reflect fluctuations in energy prices and is applicable to all gas producers in the country except state-controlled gas monopoly Gazprom.
A prime beneficiary from the approved tax privilege is a joint venture between Rosneft and BP that was established to commercialise gas reserves at the Kharampurskoye field in the Yamal-Nenets region in West Siberia.
The Kharampurneftegaz joint venture, in which BP holds a 49% stake, has been working to bring online gas reservoirs at the oil and gas field in the past three years.
The field is estimated to hold close to 900 billion cubic metres of recoverable gas reserves in two major layers — the shallow Senoman and deeper Turon.
According to Rosneft, development of Berezovskaya Svita layers could add hundreds of billions of cubic metres of gas reserves for the joint venture.
In its request to Prime Minister Mikhail Mishustin, Rosneft chairman Igor Sechin estimated that the combined reserves at these layers at the Kharampurskoye and two other fields under the company’s control in West Siberia are 1.3 trillion cubic metres.
Technically, the tax concession for Rosneft must yet be approved by the upper chamber of parliament, the Federation Council, before being signed into law by President Vladimir Putin.
Responding to critics of the tax move, Rosneft argued last month that it would foster “equal operating conditions for all gas players [in the Russian market] that are planning to develop hard-to-recover gas reserves” at their licence blocks.