Russia’s Natural Resources Ministry supports the idea of giving Gazprom a tax break for an offshore oil and gas field in the Far East after Western sanctions over Ukraine hit its development prospects. Gazprom considers the development of the Yuzhno-Kirinskoye field as essential for the expansion of its Sakhalin-2 liquefied natural gas (LNG) plant, Russia’s sole LNG plant.
Alexei Miller, chief executive of Gazprom, the world’s top gas producer, asked for tax breaks for the field near the Pacific island of Sakhalin earlier this month. “We support this request and think tax breaks could be provided,” ministry spokesman Nikolai Gudkov said on Tuesday.
He said the ministry’s position that Gazprom could have a discounted rate on mineral extraction tax (MET) for the field had been sent to the Finance Ministry for consideration. The proposal would also need to be approved by the government and the president to come into effect.
Earlier this year, the United States restricted exports, re-exports and transfers of technology and equipment to the Yuzhno-Kirinskoye field as a part of wider sanctions put on Russia over its role in the Ukraine crisis.