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Russia Upstream (Oil and Gas) Fiscal and Regulatory Guide

  • ID: 5347997
  • Report
  • May 2021
  • Region: Russia
  • 43 pages
  • GlobalData
1h Free Analyst Time

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Following the prolonged low oil prices and the suppressed oil demand due to covid-19 pandemic, Russia has moved forward with new fiscal changes as part of state’s efforts to protect revenues and balance federal budget deficits. Mineral Extraction Tax incentives related to extra-viscous and depleted fields have been removed as of January 1, 2021, whilst the phase out of Export Duty and the introduction of the Tax on Additional Income (NDM) have also been introduced during the last few years. The measures are part of a wider structural fiscal change in Russia aiming to incentivize high capital and greenfield developments in the Russian Artic and to simplify the regime by gradually transferring fields currently under the complicated MET towards the simplified NDM tax system. The Ministry of Finance is currently working out the potential inclusion of unconventional and extra-viscous oil fields under one of the existing NDM categories, although this is not expected to be implemented prior to 2024, the year in which the OPEC+ deal expires.

Enforced sanctions by the EU and the US, and structural changes in the energy sector of Russia’s key markets such as the EU and China with the acceleration towards low-carbon energy technologies are few of the long-term challenges for Russia’s oil and gas sector.

“Russia Upstream (Oil and Gas) Fiscal and Regulatory Guide”, presents the essential information relating to the terms which govern investment into Russia’s upstream oil and gas sector. The report sets out in detail the contractual framework under which firms must operate in the industry, clearly defining factors affecting profitability and quantifying the state’s take from hydrocarbon production. Considering political, economic and industry specific variables, the report also analyses future trends for Russia’s upstream oil and gas investment climate.

Scope
  • Overview of current fiscal terms governing upstream oil and gas operations in Russia
  • Assessment of the current fiscal regime’s state take and attractiveness to investors
  • Charts illustrating the regime structure, and legal and institutional frameworks
  • Detail on legal framework and governing bodies administering the industry
  • Levels of upfront payments and taxation applicable to oil and gas production
  • Information on application of fiscal and regulatory terms to specific licenses
  • Outlook on future of fiscal and regulatory terms in Russia
Reasons to Buy
  • Understand the complex regulations and contractual requirements applicable to Russia’s upstream oil and gas sector
  • Evaluate factors determining profit levels in the industry
  • Identify potential regulatory issues facing investors in the country’s upstream sector
  • Utilize considered insight on future trends to inform decision-making
Note: Product cover images may vary from those shown
1. Executive Summary
1.1 Regime Overview - Concession Agreements
1.2 Regime Overview - Production Sharing Agreements (PSAs)
1.3 Timeline

2. State Take Assessment

3. Key Fiscal Terms - Concessions
3.1 Royalties, Bonuses, and Fees
3.2 Mineral Extraction Tax (MET)
3.3 Export Duty
3.4 Tax on Additional Income (NDM)
3.5 Direct Taxation
3.6 Indirect Taxation
3.7 Land Tax
3.8 Excessive Flaring Fee

4. Key Fiscal Terms - Production Sharing Agreements
4.1 Royalties, Bonuses, and Fees
4.2 Cost Recovery
4.3 Profit Sharing
4.4 Direct Taxation
4.5 Fiscal Stability

5. Regulation and Licensing
5.1 Legal Framework
5.2 Institutional Framework
5.3 Licensing Process
5.4 Restrictions on Foreign Investments

6. Appendix
6.1 References
Contact the Publisher

List of Tables
Table 1: Regime Overview
Table 2: Russia, Key Events Since Year 2000
Table 3: Russia, Annual Surface Rental Fees (RUB/sq. km)
Table 4: Russia, MET Base Rates for Crude Oil (RUB/tonne)
Table 5: Russia, Complexity Coefficient (Kc) Values
Table 6: Russia, Crude Oil MET, Periods in Which KH=0 For Specified Regions (Previously Regional Tax Holidays Periods)
Table 7: Russia, MET Rates for Condensate (RUB/tonne), 2011-June 30,2014
Table 8: Russia, Notional Condensate Export Duty (US$/tonne)
Table 9: Russia, Export Profitability KGP Coefficient Values
Table 10: Russia, MET Rates for Non-Associated Gas, 2004-June 30, 2014
Table 11: Russia, New Offshore Field Incentives
Table 12: Russia, Export Duty Rate for Crude Oil (US$/tonne)
Table 13: Russia, Marginal Export Duty Rates for Crude Oil (%)
Table 14: Russia, Reduced Oil Export Duty for Crude Oil (US$/tonne)
Table 15: Russia, Fields Eligible for Export Duty Reduction, 2019-2021
Table 16: Russia, Export Duty Rates for LPG (US$/tonne)
Table 17: Russia, Export Duty Exemptions
Table 18: Russia, Corporate Income Tax Rate (%)
Table 19: Russia, Depreciable Asset Classes
Table 20: Russia, Withholding Tax Rates (%)
Table 21: Russia, Maximum Property Tax Rates (%)
Table 22: Russia, Sakhalin I Bonuses and Fees (US$)
Table 23: Russia, Sakhalin II Bonuses and Fees (US$)
Table 24: Russia, Kharyaga Bonuses and Fees (US$)
Table 25: Russia, Kharyaga Royalty Rates (%)
Table 26: Russia, Profit Sharing of Sakhalin I (%)
Table 27: Russia, Profit Sharing of Sakhalin II (%)
Table 28: Russia, Profit Sharing of Kharyaga (%)
Table 29: References

List of Figures
Figure 1: Regime Flow Chart - Concession Agreements
Figure 2: Regime Flow Chart - Production Sharing Agreements
Figure 3: Russia, Indicative NPV10/boe, IRR and State Take Comparison, and Price and Cost Sensitivity Analysis
Figure 4: Russia, Legal Framework
Figure 5: Russia, Institutional Framework
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