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24.10.2019
The minimum volume of investments for projects in the Arctic, which are planned to receive state support, may amount to 10 million rubles. Yuri Trutnev, the Deputy Prime Minister and Presidential Envoy to the Far Eastern Federal District (FEFD), following the results of the meeting on preferences for work in the Arctic, reported this to journalists.

"The general principles of providing state support and benefits were agreed upon at the meeting. Only new investment projects. Criteria - no more than 25% of the investment undertaking. Volume... We had some battles here. The minimum volume ceiling was raised to 10 million rubles. In general, we believe that this is acceptable for the Arctic large projects," he said.

He also noted that the principles of state support for projects in the Arctic have been agreed upon, and the disagreements will be resolved by November 8.
"The general principles of state support and benefits were agreed upon at the meeting," Trutnev said. - The deadline for clarification on all issues is November 8. In general, the positions have been agreed upon".

Rosneft in the Arctic

 According to Trutnev, the state support of the Rosneft project in the Arctic may lead to 60-70 billion rubles a year in lost revenues of the federal budget.

"Now the fields are on land. This is the largest project of Rosneft. Of course, there are shortfall in revenue there. They are estimated at 60 to 70 billion rubles a year... In fact, we can talk about changes in the cut-off price, and thus, actually, the funding in this part will go with the filling of the National Wealth Fund," he said.

Support to projects

The Deputy Prime Minister added that the state support would be available for projects throughout the Arctic, for which companies will need to obtain the status of residents of the Arctic zone.

"The support is provided throughout the Arctic zone, i.e. we do not create any separate development territories or economic zones. The entire territory of the Arctic is a preferential zone," Trutnev said.

For this purpose, it is necessary to obtain the status of a resident of the Arctic zone. "It has declarative form and there will be no procedures. It is just necessary to build relations with the tax authorities," Trutnev explained. The status should be obtained by applying to the Far East Development Corporation.

The Mineral Extraction Tax rate

Trutnev also added that fields on land and in the new oil and gas provinces of the Arctic would receive a zero rate of Mineral Extraction Tax (MET) under state support within the first 12 years from the date of reaching the depletion of 1% of reserves, followed by a full rate of return within five years.

"Then there are fields on land and in new oil and gas provinces. Let's be honest, today it is first of all the Payakhskoye field, Zapadno-Irkinskoye field, it is first of all the projects of Rosneft and Independent Oil and Gas Company. Maybe there will be something else," he said.

"They will have a new fifth category of the field within the framework of Excess-Profits Tax. The Mineral Extraction Tax (MET) is zero for the first 12 years from the moment when the reserves are depleted by 1%. In addition, after 12 years, the field will gradually reach the full rate within 5 years. It’s the subjects' right to reduce to zero the regional part of profit tax, property tax, and land tax," Trutnev added.

The LNG projects

In addition, according to Trutnev, state support measures will allow Novatek, Lukoil and Gazprom Neft to implement new LNG and gas chemical projects in the Arctic.

"The second group is LNG and gas chemistry. Nothing much has changed here. The mineral extraction tax is zero for 12 years from the moment of delivery of the first batch of LNG and the right of the subjects to reduce to zero the regional part of profit tax and property tax, land tax," he said.

"There are also several opportunities to launch new projects: "Arctic LNG-3, first of all, is the North-Obskiy license area in the Gulf of Ob, license areas of Yuzhno-Leskinskiy, Dorofeevskiy, Yuzhno-Dorofeevskiy, Zapadno-Dorofeevskiy, Tanamskiy, Khamel’eshskiy, Pauzhskiy, and Yuzhno-Khamel’eshskiy," Trutnev added.

Source: information agency “TASS”
Photo: information agency Arctic Info