Issue link: http://resourceworld.uberflip.com/i/1125235
68 www.resourceworld.com J U N E / J U L Y 2 0 1 9 Russia prepares tax benefits for investors in offshore territories by Eugene Gerden T he Russian government has officially announced it will present a package of benefits for investors, operating in the domestic shelf by the end of the cur- rent year, according to recent statements of Pavel Sorokin, Russia's Deputy Minister of Energy, a state official in the Russian govern- ment responsible for offshore development. According to Sorokin, the design of planned support measures are ongoing, while a major focus will be put on the pro- vision of various tax benefits for investors. For this purpose, a separate chapter will be created in the Russian Tax Code that will be directly focused on regulation of a tax regime on the domestic shelf. Instead of fixed tax rates, the govern - ment plans to introduce the ad valorem (assessed value) tax rates as well as an indi- vidual approach for investors operating in the Russian shelf. That will allow the government to implement more flexible policy in the field of taxation of offshore investment activities. As for investors, the rate of their tax will mainly depend on the efficiency of their activities in the Russian shelf, the gained revenue and the volume of invested funds. As part of these plans, for the first time in the history of modern Russia, the gov - ernment plans to provide an access for the development of the national offshore oil and gas fields to private companies, including those of foreign origin. At present, Russian legislation allows only state-owned oil and gas corporations, such as Rosneft and Gazprom, to operate on the national shelf; however, there are plans to end this monopoly this year. As part of the state plans provid - ing benefits for utilization of associated petroleum gas (APG), now companies can flare no more than 5% of APG; however, according to state plans, these figures will be increased. According to Sorokin, particular atten - tion will be paid to attract investors for the development of Russia's Arctic shelf, where most of the country's major oil and gas fields are located. So far, the progress with its development has been insignifi- cant which was mainly due to sanctions, imposed on Russia, low oil prices and lack of support from the state. Dmitry Kozak, Russia's Deputy Prime Minister, said investors wishing to oper - ate on Russian shelf would have to enter into special investment agreements with the Russian government, where all the commitments between the sides and terms of the project will be fixed on the highest governmental level. According to plans of the Russian Ministry of Energy, successful implemen - tation of these plans will allow increased oil production on the Russian shelf of up to 9-11 million tons and 15 billion cubic metres in the case of gas by 2035. Elena Dyachkova, PhD, a senior consultant of the Russian Ministry of Environment, commented, "Currently, the Russian Arctic shelf includes 6.5 mil - lion km 2 of water, of which 4-4.4 million is recognized as promising in terms of oil and gas reserves. Unfortunately, a significant part of these territories is poorly studied, particularly in regard to the East Arctic region. The cur - rent balance includes only 25 oil fields and 44 gas fields." n * Resource World does not sell your information to third parties #604-700 W Pender St., Vancouver BC V6C 1G8 Canada online at www.resourceworld.com or phone 1.877.484.3800 SAVE 50% up to Resource World (Print and Digital Edition) 1 Year/6 issues (CAD $24.95) Resource World (Digital Edition) 1 Year/6 issues (CAD $12.95) Resource World International (outside Canada and USA (Print and Digital Edition) 1 Year/6 issues (CAD $99.95) NAME ADDRESS TEL EMAIL INVESTMENT