Gazprom Neft is looking for new partners

According to Kommersant, Gazprom Neft is asking to expedite the finalization of tax legislation to launch service risk agreements (SSR). The company hopes to apply the CSR as early as 2023, hoping to attract new foreign investors. Gazprom Neft also wants to speed up the adoption of a tax credit to finance infrastructure for the removal of condensate from the Kharasaveyskoye field.

Kommersant got acquainted with the letter that the head of Gazprom Neft, Alexander Dyukov, sent to Deputy Prime Minister Alexander Novak in October. In it, the top manager asks the government to provide “accelerated legislative support” for the bill on service risks, so that it will start working from 2023.

The oil company wants to be able to attract investors to upstream projects under two new types of agreements – on service risks and financing management (for more details, see Kommersant on June 15), “which is especially relevant in the face of increasing sanctions pressure.” Such agreements make it possible to adjust the parties’ shares in the income and expenses of a production project without transferring a share to a foreign investor directly in the field, which, according to Gazprom Neft, eliminates the complicated entry and exit procedures typical of classic joint ventures.

The US and EU have banned their companies from making new investments in oil and gas projects in Russia, so Gazprom Neft wants to attract Asian investors. After the outbreak of hostilities in Ukraine, the key foreign partner of Gazprom Neft, the British Shell, decided to withdraw from joint projects and is now trying to sell 50% in their joint venture, Salym Petroleum Development.

Now there are no clear taxation rules for new forms of joint investment, which actually becomes an obstacle to the use of agreements, significantly reducing their attractiveness to investors, a Kommersant source familiar with the discussion explained. “We are not talking about providing any additional preferences or benefits, but about the regulation of new business transactions in the Tax Code,” he said. According to him, in general, the government supports these proposals.

Alexander Dyukov reports that back in July, Prime Minister Mikhail Mishustin instructed the Ministry of Finance to submit the relevant draft to the government in November 2022, and to the State Duma in March 2023. Another interlocutor of Kommersant said that the government will submit the draft to the State Duma in the near future, but it is unlikely that they will have time to agree on it this year.

Gazprom Neft also wants to speed up the adoption of a law on providing a tax credit for the construction of transport infrastructure for Gazprom’s Bovanenkovskoye and Kharasaveyskoye fields in Yamal, where Gazprom Neft wants to start oil and condensate production under an operating agreement with the parent company. We are talking about the oil pipeline from Kharasavey to Bovanenkovo, from where it was planned to transport raw materials by rail to the port of Ust-Luga.

At the end of July, Prime Minister Mikhail Mishustin instructed the Ministry of Finance to develop a draft tax support and submit it to the State Duma in January 2023. According to the project, Gazprom Neft will receive a MET tax deduction in the amount of RUB 1.1 billion. in 2023–2028 in the form of a tax credit at a rate of 9% (185 million rubles per year).

The press service of the government forwarded Kommersant’s questions to the Ministry of Finance, where they said that the project on the “tax credit” was submitted to the “government on time.” The Ministry of Finance also noted that they had prepared a draft law on the procedure for imposing VAT and income tax on operations within the SSR, in relation to which there may be uncertainty in the application of existing taxation rules. The ministry did not specify the timing of its submission to the State Duma.

In the Tax Code of the Russian Federation there are no special rules on taxation of the SSR, Zaurbek Akhmetov, partner of Mitra law firm, clarifies. According to the lawyer, Gazprom Neft seeks to obtain additional certainty regarding the tax consequences of such agreements in order to avoid further disputes with the tax authorities.

Dmitry Kozlov