Gazprom says Russia's planned tax rises hinder gas projects
* Gazprom says tax increase will hinder gas production
* Gazprom put on hold Shtokman project due to high costs
* 2012 production could fall 3 percent - analyst
By Vladimir Soldatkin
MOSCOW, Sept 4 (Reuters) - Gazprom, the world's biggest producer of natural gas, warned the Russian government on Tuesday that it may delay new projects, especially those in remote locations, if proposed tax increases make them unprofitable.
The company has already put on hold development of the giant Shtokman offshore field in the Arctic, which it had planned to tap together with France's Total and Norway's Statoil , as it said the costs were too high in the absence of tax relief.
The government, which needs to honour spending promises made during this year's election campaign, has proposed raising the mineral extraction tax (MET) paid by Gazprom, which has lost a fifth of its market capitalisation since news of the tax increase plans emerged in March.
London-based consultancy Capital Economics estimates that by 2018 Russia's total bill for election-related promises will reach 4.8 trillion roubles ($163 billion) a year, or 4-5 percent of gross domestic product.
Under the tax proposals, state-controlled Gazprom will pay MET of about 1,000 roubles ($31) per 1,000 cubic metres in 2015 - four times current levels. Smaller, independent companies such as Novatek will face paying at almost the same rate, but the rise for them will be more gradual.
Gazprom said gas production at some fields could become loss-making as a result of the increased tax bill.
It did not name specific fields where output is likely to be unprofitable due to heavy tax but said that some deposits, such as Kirinskoye near the Far Eastern island of Sakhalin and Prirazlomnoye in the Arctic - where production is due to begin soon - do not enjoy tax reliefs as some other remote fields do.
"The situation will hinder resources development both at large deposits, which are currently being developed, and at new producing provinces," Gazprom said in a statement distributed after a board meeting.
Gazprom already faces declining gas production, which fell 2.4 percent in August from the same month a year earlier. Its exports have also been declining this year due to sagging demand in Europe as a result of the debt crisis.
Troika Dialog brokerage said its full-year projection of gas production for Gazprom, at 494 billion cubic metres (bcm), which is already 3 percent less than output in 2011, "does not seem realistic any longer, and the figure is now likely to slip below 490 bcm".
Falling demand and rising costs have meant that, apart from Shtokman, Gazprom has also postponed development of the huge Bovanenkovo field in the Yamal peninsula in the Arctic, which is seen as the company's next major source of gas production.
Gazprom said it wanted to the government to introduce a zero MET rate for offshore gas destined to be liquefied, and proposed varied taxes on fields depending on their location, state of depletion and quality.
($1 = 32.3300 Russian roubles) (Editing by Anthony Barker)
- Tweet this
- Share this
- Digg this