Page 62: of Offshore Engineer Magazine (Mar/Apr 2014)

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Rosneft president Igor Sechin.

Left image: Rosneft; right image: Gazprom.

Russia limits development of the shelf.

Russia

If the latest claims of Rosneft and its foreign partners to be met, this will be a access to second major success of the shelf’s opera- tors for the last several months and will make the Russian shelf one of the worlds

Arctic most favorable and liberal, in terms of taxation and ecology.

The latter will be also mainly due to the recent adoption of the federal law, On tax and customs tariff stimula- tion of production of hydrocarbons on

Russia’s continental shelf, approved by the Russian Parliament late last year and which divided all of Russia’s offshore projects into four categories based on the level of complexity.

Unlike to other offshore projects, approvals for some of the activities may where mineral extraction tax is set at

Global oil majors continue to take up to two years and require more 30% of the cost of raw materials, in the lobby concessions for operations than 60 approvals from different state case of the Arctic projects, this rate is set on Russian Arctic shelf; agencies. at the record low ? gure of 5%.

Rosneft formally commented: In addition, all operators of Arctic

Eugene Gerden reports.

“Simpli? cation of the procedures does offshore projects will receive a guarantee not mean their abolition. We are talking of permanency of the tax regime for up to mid the ? erce critics from about the acceleration of completion of 15 years, and will be exempted from pay- global environmental organiza- these procedures. Currently their total ment of export duties, as well as import

A tions, the Russian government number is about 60, while their comple- duties and VAT on imported technical continues to create conditions for the tion may take up to two years.” equipment. The law also exempts opera- attraction of foreign investors for the Sechin believes that some issues tors from property and transport tax.

development of the national Arctic shelf. hamper the development of the national In return, the companies have pro-

Following the unprecedented tax ben- Arctic shelf and should be resolved as vided guarantees for the start of produc- e? ts that were granted to Rosneft and its soon as possible. These include the prob- tion on the shelf beginning in 2016. foreign partners for the development of lem of importing drilling waste to Russia, The Russian government explains the Russian Arctic shelf at the end of last the long procedures of passport and visa the decision for the provision of such year, the Russian government is currently control for workers on offshore drilling preferential tax regime to the companies considering approving additional mea- platforms and ships, and the existing ban is based on harsh climatic conditions of sures, aimed at creating more a favorable on foreign companies using their own the Arctic region, which is associated regime for the company’s operations on equipment for operations on the Russian with high production costs for them and the domestic Arctic shelf. Arctic shelf. require investments, estimated at a total

The need to provide additional bene? ts According to the Kremlin’s press ser- of $700 billion. for Arctic offshore projects was announced vice, Vladimir Putin has already received

The decision to provide bene? ts to the in February by Igor Sechin, head of the letter from Rosneft and generally companies was taken despite the opposi-

Rosneft, in an of? cial letter addressed to supports the latest claims of Rosneft. tion of Sergey Donskoy, Russia’s Minister

Russian President Vladimir Putin. It is reported that Putin has sent them of Natural Resources, who also proposed

According to Sechin, amid the forth- to introduce tax on additional income for for further consideration to the Chief of coming active development of the domes- the companies. The proposal, however,

Presidential Administration, Sergei Ivanov, tic Arctic shelf, Rosneft and its foreign has not received any support from the and to Prime Minister Dmitry Medvedev.

partners, in particular, ExxonMobil, Eni Russian analysts believe that the pres- Russian government.

According to an of? cial representative of and Statoil, are not happy with the exist- sure of Rosneft and its foreign partners on the Russian Presidential Administration, ing national legislation covering shelf the national government is quite under- providing these bene? ts will create condi- development, which restricts some of the standable. According to Valery Nesterov, tions to encourage more active participa- planned activities of the partners. a senior analyst of Sberbank CIB, one of tion of foreign investors in the develop-

According to Rosneft, operations on Russia’s leading agencies in the oil and ment of the Russian Arctic shelf.

the domestic Arctic shelf still require a gas market, the partners have focused on large number of formal approvals from the ? ght for licenses. However, now that This have not gone unnoticed by major ministries and departments, which need all the licenses have been distributed, the partners of Rosneft in Russia, and in to be granted at various stages of the com- companies are trying to eliminate other particular ExxonMobil, which recently panies’ work. Rosneft says the receipt of obstacles that may prevent full-scale announced plans to leave similar Arctic

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