Russian ministries near agreement on calculation method for hard to recover oil and gas concessions - Tsivilev

ST. PETERSBURG. June 19 (Interfax) - The Energy Ministry and Finance Ministry are close to reaching a consensus on which method should be used to calculate concessions for fields with hard to recover oil and gas reserves (HRR) and are considering calculating them on an individual basis using digital twins, Russian Energy Minister Sergei Tsivilev told journalists at the sidelines of the St. Petersburg International Economic Forum.

"We are actively conducting discussions with the Finance Ministry [on expanding HRR extraction concessions]. There is already an understanding between both ministries on the issue," Tsivilev said.

"We are developing our own new technologies for HRR. Of course, they are expensive and have a much longer pay-back period. But if we don't promote these technologies, we will be left with a huge amount of reserves which we won't be able to extract. They will stay in the earth," the minister said.

He said that the Energy Ministry had proposed to the Finance Ministry the creation of digital twins for each HRR field to use for the calculation of possible concessions. "Each enterprise individually, and we can't apply an 'across-the-board average' here. Ideally, we will select a model and calculate concessions for each individual field using a digital twin," Tsivilev said.

He said that the two ministries needed to find a balance between promoting the interests of oil companies and filling the budget.

Tsivilev also said that concessions for gas chemistry projects were currently under discussion.

Speaking to journalists, Deputy Finance Minister Alexei Sazanov confirmed the ministry's stance that an expansion of tax on additional income for HRR development was not a possibility while the OPEC+ agreement was in place. He also said that there were currently no active discussions on expanding concessions. "Most likely, we will hold the next discussion in autumn. We need to see how the OPEC+ agreement evolves," the deputy minister said.