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Russia to liberalize natural resources sector
by Staff Writers
Moscow (Voice of Russia) Apr 17, 2012

CAPTIONRosneft, Exxonmobil seal shelf exploration
Russia's Rosneft oil giant and U. Exxon Mobil have signed a package of cooperation agreements, envisaging joint oil exploration in West Siberia and gas exploration in the Kara and Black Seas.

Rosneft will have a share in three Exxonmobil's projects in North America in exchange for its Arctic assets.

Russia's PM Vladimir Putin praised the agreements and expressed hope that bilateral cooperation will last long.

Russia's oil and gas sector awaits a new development stage, say experts who asses the initiatives adopted by the government to develop the continental shelf.

For one, they offer unprecedented privileges for the operator-companies of shelf projects such as abolishing export duties and lowering natural resources production tax.

They may also allow selling gas from shelf deposits at market prices. The Russian Finance Ministry has promised to legalize these preferences by the 1st of October.

Experts describe the decision on the natural resources production tax as the key initiative. The tax rate will be lowered depending on the complexity of the work at a deposit. There will be four categories of complexity which will take into account the conditions of development, depth, infrastructure, ice report and other factors.

According to this ranking, the simplest grade or the first category includes the projects on the shelves of Azov and Baltic seas. The most complicated is the Barents Sea shelf, and tax rate for it will be reduced down to 5 percent.

This measure will seriously simplify the development of strategic Arctic deposits and stimulate the oil and gas sector as a whole.

The liberalization of oil and gas production on the shelf is crucial for the development of the largest investment projects in the Arctic, the Shtokman gas condensate deposit.

This project is implemented by Russia's state-run Gazprom together with Norway's Statoil and France's Total. The reserves at the Shtokman deposit are estimated at about four trillion cubic meters. The Shtokman project is expected to launch in 2016. A part of the produced gas will be delivered to the European Union through the Nord Stream pipeline.

The new rates should remain unchanged at least for 15 years. This will reduce risks for investors, says Prime Minister Vladimir Putin. At the same time, the government insists that local equipment should be used in the implementation of privileged projects.

Another measure is the abolition of export duties for new deposits. This duty for oil has exceeded 450 U.S. dollars per ton in April. According to experts, this move will reduce half of the investors' expenses.The government is planning to allow selling gas at market prices too.

As a whole, experts believe that the benefit from the large-scale liberalization will be about a half a trillion U.S. dollars. The government believes that the companies will invest such a sum in shelf projects when the new regulations come into force.

Source: Voice of Russia

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According to Deputy Economics Minister Andrei Klepach, radical technological and managerial innovation can help Russia increase its annual natural gas production by one third to 900 billion cubic metres before 2030.

The most promising gas producing areas are Eastern Siberia, the Far East, the Arctic belt of western Siberia and the Arctic Shelf.

Over one fifth of Russia's natural gas will flow to buyers in Asia and the Pacific.


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