Sunday, August 14, 2016

Oilers again promised tax breaks – Kommersant

Oil companies want to extend the grace period of the tax on mineral extraction (MET) for new projects. Department of Energy suggests that the benefits were given to the actual start of production at the field, although it is now the countdown period starts from the date of registration of licenses for subsoil. The main opponent of the initiative is the Ministry of Finance, who is afraid of loss of revenue. The Ministry of Natural Resources to the idea, according to “Kommersant”, are restrained and believe that it could lead to a tightening of terms of field development.

Energy Ministry has developed amendments to the Tax Code (NC), which change the approach to the calculation of the terms of eligibility for the mineral extraction tax on new oil production regions. According to the bill, the validity of exemptions on mining, particularly for offshore Eastern Siberia and the areas north of 65 degrees north latitude, will be counted from the moment of depletion of 1% of the reserves. Now they are given immediately after the registration of the license to the field for seven – ten years. Now the project goes public comment procedure, and if adopted, affect the majority of users of mineral resources, told “Kommersant” in the Ministry of Energy. The interlocutor of “Kommersant” in the industry explained that the Ministry of Energy has prepared a draft in response to the request of the Presidential Commission on fuel and energy sector.

The oil companies did not officially comment on the idea, but the “Kommersant” sources claim that oil companies support the initiative. “Its implementation will allow to avoid the regular amendments to the Tax Code, aimed at the extension of benefits for certain regions due to changes in macroeconomic conditions and terms of infrastructure availability, since the validity of the benefits will be renewed automatically,” – said the source “b” in “Gazprom Neft” . I agree with him and the source of “b” in “Rosneft”, indicating that the idea of ​​such benefits does not belong to state-owned companies. Now the initiative is relevant to such projects as Chonsky, Western Jubilee projects, as well as a joint venture with “Rosneft” on the West Messoyakhskoye and Kuyumbinskoye deposits and NOVATEK ( “Arcticgaz”), as extended the favorable factors to their rate of mineral extraction tax, says source “b” in “Gazprom oil”.

But in other departments is or do not agree with the initiative of the Ministry of Energy, or is not willing to support it unequivocally. A key opponent of the amendments is the Ministry of Finance, who believes that “the conditions of the structural deficit” to provide new tax breaks oil companies is inappropriate. The Natural Resources Ministry official does not comment on the issue, but the source “b” in the department said that it recognized the need for exemptions for oil, but there are fears that they will delay exploration. The Ministry of Economy, “Kommersant” said that “form a position.”

In the current macroeconomic situation of mining companies seeking support for its multibillion-dollar projects, said Karen Dashyan of Advance Capital. According to him, the position of the Ministry of Energy to meet the subsoil users is justified because no additional benefits the projects bring huge losses, but in the long term can provide a great benefit for the budget.

Dmitry Kozlov


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