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Main page > Comments > Fuel & Energy > Putin may have to hike Gazprom's extraction tax
Putin may have to hike Gazprom's extraction tax
Russia's Finance Ministry has proposed to more than double the mineral extraction tax for Russian gas monopoly Gazprom next year. Russia’s Deputy Finance Minister Sergei Shatalov was quoted as saying on 14 June that in 2012 the mineral extraction tax will soar to 480 rubles (€12) per 1,000 cubic meters from 237 rubles (€5.93) now. In 2013 it will further increase to 600 rubles (€15) and then rise to 635 rubles (€15.89) in 2014. Gazprom may face a tax burden of as much as 505 billion rubles (€12.64 billion) in the next three years, Russian Finance Minister Alexei Kudrin said on 1 June.
Russia relies on oil and gas for most of its budget revenue. “First of all, in Russia if we want to increase taxes, we are thinking about all and gas business,” Konstantin Simonov, the General Director of the National Energy Security Fund in Moscow, told New Europe on 15 June.
Gas production in Russia is subject to much lower rates of extraction tax than crude oil production. “Taxes on oil companies are higher than gas companies and oil companies are usually asking for decreasing of taxes because, according to their position, there is no money for new investment. That is why in this case Minister of Finance is proposing idea to think of gas companies,” Simonov said.
Simonov said that Kudrin expects an increase in state expenditures due to the upcoming elections and wants to increase taxes because there is not enough money in the state budget. The proposals to increase gas taxes are still under discussion. So far, Gazprom, with the support of Prime Minister Vladimir Putin, has been able to avoid any increases in the rate between 2006 and 2010. But now, due to the upcoming elections, Putin may have no choice but agree to raise mining taxes on the gas industry, Simonov said.
Gazprom has warned that an increase in its tax burden would discourage new output. Gazprom, which has seen a decline in Brownfield production, has said that there has been no serious investment in Greenfields for a long time. The Russian company needs cash to develop its Bovanenkovo field, to construct a pipeline system from Bovanenkovo to Ukhta, and to develop other Yamal projects. Next year, Gazprom plans to increase its investment program. The annual shareholder meeting of Gazprom will be on 30 June. Kudrin said that the Finance Ministry doesn’t plan to raise next year’s rates for independent gas producers, such as OAO Novatek. Next year, Novatek and other independent producers will pay 251 rubles (€6.28) per 1000 cubic meters and only slightly more, 265 rubles, (€6.63) in 2013.
By Kostis Geropoulos
New Europe, June 15, 2011
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