Alaska News

Gazprom demands tax breaks on Arctic oil production

Alaska's oil producers aren't the only petroleum companies having a hard time convincing a government to scale back taxes this year.

According to Reuters, Russia's state-owned major Gazprom has demanded that the Russian government reduce production taxes for the Arctic offshore project Prirazlomnoye before it is brought online, but has so far seen little response.

The heavy, sour oil will be pulled up by Russia's first ice-resistant offshore production platform. Cost overruns and several construction delays have already put the project beyond its anticipated completion date. And now Gazprom has announced a further delay to the project, to the second half of this year.

Russia's First Deputy Prime Minister Viktor Zubkov, also Gazprom's chairman, recommended Prirazlomnoye for a preferential oil export fee last year, but the proposal hasn't budged.

"As of today, the Russian government has not decided on special custom tax rate for Prirazlomnoye field," Gazprom told Reuters, which confirmed with government officials.

"It required much paperwork, and Gazprom has not presented the necessary documents for a decision to be made," a government source said.

Reuters also reports that Gazprom is seeking preferential tax treatment for the Arctic natural gas megaproject at Shtokman, in which it has partnered with France's Total and Norway's Statoil.

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The Shtokman project is expected to come online in 2016, but as with Prirazlomnoye, the tax issue is a sticking point.

Read much, much more, here.

Craig Medred

Craig Medred is a former writer for the Anchorage Daily News, Alaska Dispatch and Alaska Dispatch News. He left the ADN in 2015.

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