The change in the oil sector taxation

Sergey Kondratiev, Deputy Head of the Economic Department of the Institute for Energy and Finance, commented to the Kommersant newspaper about the change in the taxation of the oil sector.

According to Kommersant's information, we are talking about introducing a differentiated rate - if the gas price is above $300 per 1,000 cubic meters, the duty will be increased to 50% compared to the current level of 30%.

Currently, NOVATEK's Yamal LNG and Gazprom's Sakhalin-2 projects are exempt from export duties and, in fact, from MET (Yamal LNG has a long-term MET exemption). The key problem is that both the production sharing agreement for Sakhalin-2 and the intergovernmental agreement between Russia and China on Yamal LNG (Chinese CNPC and the Silk Road Fund are shareholders in the project) prohibit the worsening of tax regimes.

Revision of the terms of taxation for Sakhalin-2 is possible upon agreement with the participants in the PSA, Sergey Kondratiev says.

“It is quite possible that a compromise option will be chosen now - the Sakhalin-2 participants will agree to increase taxes, and in return they will be offered an extension of the PSA or the inclusion of additional fields in the PSA. Such a scheme was used, for example, in Kazakhstan,” he says.

As for the Yamal LNG project, it is quite possible that the Russian side, in order to circumvent the norms of the intergovernmental agreement, will have to change the tax regime, for example, the introduction of an excise tax on LNG, Mr. Kondratyev believes.