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Russia Upstream Fiscal and Regulatory Report - MET to Stabilize Tax Burden as Export Duties Phase Out

Russia Upstream Fiscal and Regulatory Report - MET to Stabilize Tax Burden as Export Duties Phase Out

Summary

The vast majority of upstream oil and gas operations in Russia are governed by subsoil licenses under a concession-type regime. Currently, the upstream tax burden is made up of two main elements, Mineral Extraction Tax (MET) and export duties. Oil export duty will be phased out from 2019-2024, but the overall tax burden will remain relatively stable as an element equivalent to the export duty will be added to MET rates. A new profit-based tax (NDM) regime will also come into force in 2019 for selected fields included in a pilot phase, with the regime applying a reduced rate of MET in favor of a 50% tax on field profits.

“Russia Upstream Fiscal and Regulatory Report - MET to Stabilize Tax Burden as Export Duties Phase Out”, 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.


  • Regime Overview
    • Table Regime Overview
    • Table Figure 1: Regime Flow Chart - Concession
    • Table Figure 2: Regime Flow Chart - Production Sharing Agreement
  • State Take Assessment
    • Table Figure 3: Russia, Indicative NPV10/boe, IRR and State Take Comparison, Regional
  • Key Fiscal Terms- Concession
    • Royalties, Bonuses and Fees
      • Signature Bonus
      • Annual Rental Fee
        • Table Russia, Annual Rental Fees (RUB/km2)
    • Mineral Extraction Tax
      • Crude Oil
        • Table Russia, MET Base Rates - Crude Oil (RUB/tonne)
        • Table Russia, Complexity Coefficient Values
        • Table Russia, Oil MET - Periods in which KH = 0 for Specified Regions (Previously Regional Tax Holiday Periods)
      • Condensate
        • Table Russia, MET Rates - Condensate (RUB/tonne), 2011-June 30, 2014
        • Table Russia, Notional Export Duty - Condensate (US$/tonne)
        • Table Russia, Export Profitability Coefficient Values
      • Natural Gas
        • Table Russia, MET Rates - Non-Associated Gas, 2004-June 30, 2014
      • New Offshore Field Incentives
        • Table Russia, New Offshore Field Incentives
      • Mineral Extraction Tax Holidays
      • Special Deduction for Crude Oil
      • Tax deduction for NGLs Stripped from Condensate
      • Special Black Sea Deduction for Gas
    • Export Duty
      • Crude Oil
        • Table Russia, Export Duty - Crude Oil (US$/tonne)
        • Table Russia, Marginal Export Duty Rates - Crude oil (%)
        • Table Russia, Reduced Oil Export Duty (US$/tonne)
        • Table Russia, Fields Eligible for Export Duty Reduction, 2019 onwards
      • Natural Gas and LNG
      • Liquefied Petroleum Gas
        • Table Russia, Export Duty - LPG (US$/tonne)
      • Export Duty Exemptions
        • Table Russia, Export Duty Exemptions
    • Additional Income Tax on Hydrocarbon Production (Pilot for Selected Fields)
    • Direct Taxation
      • Corporate Income Tax
        • Table Russia, Corporate Income Tax Rate (%)
      • Deductions and Depreciation
        • Table Russia, Depreciable Asset Classes
      • Investment Tax Deduction
      • Withholding Tax
        • Table Russia, Withholding Tax Rates (%)
    • Indirect Taxation
      • Value Added Tax
      • Import Duties
      • Property Tax
        • Table Russia, Maximum Property Tax Rates (%)
      • Land Tax
      • Excessive Flaring Fee
  • Key Fiscal Terms - Production Sharing Agreement
    • Royalties, Bonuses and Fees
      • Royalty
        • Table Russia,Kharyaga Royalty Rates (%)
      • Bonuses and Other Fees
        • Table Russia, Sakhalin I Bonuses and Fees (US$)
        • Table Russia, Sakhalin II Bonuses and Fees (US$)
        • Table Russia, Kharyaga Bonuses and Fees (US$)
    • Cost Recovery
    • Profit Sharing
      • Table Russia, Profit-Sharing - Sakhalin I (%)
      • Table Russia, Profit-Sharing, Sakhalin II (%)
      • Table Russia, Profit-Sharing - Kharyaga (%)
    • Taxation
      • Corporate Income Tax
      • Deductions and Depreciation
      • Value Added Tax
      • Tax Exemptions
    • Fiscal Stability
  • Regulation and Licensing
    • Legal Framework
      • Table Figure 4: Russia, Legal Framework
      • Governing Law
      • Contract Type
      • Title to Hydrocarbons
    • Institutional Framework
      • Table Figure 5: Russia, Institutional Framework
      • Licensing Authority
      • Regulatory Agency
      • National Oil Company
    • Licensing Process
      • Auction Notice
      • Application Requirements
      • Auction Process
    • License Terms
      • Duration and Relinquishments
      • Work Obligation
      • Environmental Regulation
      • Local Content
    • Restrictions on Foreign Investment
  • Outlook
  • Appendix
    • References
      • Table References
    • Contact Us
    • Disclaimer

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