Benefits for Gazprom promised again – export to China to be supported with nulling of taxes

The Kommersant has found out details of the preferential tax regime, proposed to Gazprom, which should help the company to obtain an acceptable level profitability from the gas export supplies to China. The Government is ready to nullify the MET for the fields of Gazprom in Yakutia and the Irkutsk region until reaching accumulated production volume of 1.65 trillion cubic meters, which will take about 25 years, as well as the property tax for all projects of the Eastern Gas Program, except the offshore ones. According to analysts' estimates and calculations of the Kommersant, the benefits can help Gazprom to save about $1 billion per year.

The Government is ready to support the Gazprom’s project on gas exports to China by the zeroing of tax on mineral extraction (MET) and property tax, a source familiar with the contents of the draft intergovernmental agreement with China told the Kommersant. According to him, it is proposed to nullify MET for all fields of Gazprom and its subsidiaries in the Irkutsk region and Yakutia, the zero rate will be valid until the accumulated volume of produced gas will reach 1.65 trillion cubic meters. At the same time, MET will be nullified not only for export gas, but also for gas, provided for domestic consumers. All the major fields of Gazprom, which will serve as a resource base for the gas supplies to China through the Power of Siberia gas pipeline, including the Kovyktinskoye and Chayandinskoe ones, fall under this benefit. On the basis of the declared capacity of the Power of Siberia pipeline in the volume of 61 billion cubic meters per year, the privilege is designed for about 25 years.

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