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Bargain over gas production tax

The bargain between gas producers and the finance ministry over the future gas production tax continues. Kudrin’s ministry seems to be ready to make concessions but they are insignificant. The gas production tax on Gazprom is to be 480 rubles per 1,000 cu m in 2012, 600 rubles in 2013, 635 rubles in 2014. Previously the finance ministry planned to raise the tax to 536 rubles per 1,000 cu m as of 2012.

Although government officials call this decision “almost final”, in reality this is just another stage in the non-stop struggle between pros and cons of the tax rate advance. Gazprom still hopes to persuade the government to offset growth in the gas production tax by some measures it suggests.

One of the variants is to accelerate advance in domestic gas prices (however, there are plans to slow down the pace of their growth before the elections). Another variant has been recently put forward by Gazprom deputy CEO Alexander Ananenkov; he suggested replacing increase in the gas production tax rate by its differentiation. The concern would agree to a higher gas production tax on new deposits located close to the infrastructure. However, Gazprom wants preferences for old deposits containing low pressure gas. Finally, the gas giant may deliberately decrease expenses on investment programs making state authorities choose between decline in taxes and delaying development of new deposits. It seems we will face long-lasting uncertainty within the triangle of the gas production tax, growth in domestic gas prices and investment expenses.

By Stanislav Mitrakhovich, NESF leading expert

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Analytical series “The Fuel and Energy Complex of Russia”:

Gazprom on the background of external and internal challenges
Regulation of Oil and Gas Sector in 2019 and Prospects for 2020
Fiscal Policy on Oil and Gas Sector: Revised as Often as Wikipedia
The tax system in the oil and gas sector continues to undergo radical changes. The beginning of 2019 saw the introduction of a new tax regime: additional income tax. That experiment was supposed to start migration of the oil industry to an innovative principle of taxation: on profit, not revenue. It seemed that a new main road was found. In the same year, however, the Finance Ministry launched an overt offensive against AIT. The fear of loss of government revenue now is more powerful than the threat of causing oil production to collapse in the medium term because of a tax system that does not stimulate investment. The Finance Ministry would strongly prefer to speed up the tax manoeuvre completion that earns the state budget additional money. Oil and gas companies respond to this with individual lobbying, attempting to wangle special treatment for their projects.
Ukrainian Gas Hub: Climax at Hand
The “zero hour” comes in less than a month: the contracts for gas transit through Ukraine and for supplying Russian gas to the country terminate at 10 am on 1 January. Meanwhile, Gazprom and Naftogaz are very far from looking for a mutually acceptable solution. The entire European gas business is watching intently the negotiations between Russia and Ukraine. Everyone is waiting for a new “gas war”: the January 2009 events proved to be a serious test both to European consumers and to Gazprom as a supplier. Is there still a chance of agreement? If there is not, will Gazprom cope with its obligations to deliver gas to Europe? Is Russia bluffing as it assures that the new infrastructure and gas in underground storage facilities will enable it to get by without Ukrainian transit even as soon as this winter? What will happen to Ukraine itself at the beginning of 2020?
Digitisation and Its Implications for Oil and Gas: Myths and Possible Reality

All reports for: 2015 , 14 , 13 , 12 , 11 , 10 , 09 , 08 , 07

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