State Duma Budget Committee approves zeroing out MET for hard-to-recover Yamal gas for LNG production

MOSCOW. Nov 21 (Interfax) - The State Duma Budget Committee on Thursday approved amendments to the Tax Code proposed by the Finance Ministry to zero out the mineral extraction tax (MET) for hard-to-recover gas on the Yamal Peninsula used to produce liquefied natural gas, as well as amendments that will abolish, from 2025, the MET tax deduction for gas condensate sent for processing with the natural gas liquids (NGL) recovery.

The MET rate would be zeroed out for hard-to-recover gas from Achimov and Jurassic pay zones on the Yamal Peninsula and used for the production of liquefied natural gas. The tax would be reset to zero from 2028 until the cumulative volume reaches 130 billion cubic meters and 15 million tonnes of condensate in total for all subsoil areas, but no later than December 31, 2037.

There is currently one LNG plant operating on the Yamal Peninsula, namely Yamal LNG, the main owner of which is Novatek , which is already producing gas from the Jurassic deposits of the South Tambeyskoye field, the project's resource base.

The MET tax deduction for gas condensate sent for processing with recovery of natural gas liquids was introduced at the request of petrochemical holding SIBUR, which uses condensate purchased from gas companies, notably Novatek, as feedstock.

The Finance Ministry proposes to abolish this deduction for five years.