The State Duma Approved the Zeroing of the Mineral Extraction Tax for the Novatek Project in Yamal
The State Duma Committee on Budget and Taxes supported the adoption in the first reading of a bill establishing a zero severance tax rate for gas produced in Yamal and Gydan for the production of ammonia and hydrogen. It can be submitted to the State Duma on May 31.
The document submitted by the government of the Russian Federation is aimed at providing conditions for the creation of new capacities for the production of ammonia and hydrogen on the Yamal and Gydansky peninsulas in the Yamalo-Nenets Autonomous Okrug by providing tax incentives. Its implementation will make it possible to reset the MET for Novatek’s project for the production of ammonia Obsky Mining and Chemical Combine in Yamal.
The draft law provides for the establishment of a zero tax rate for mineral extraction for the extraction of natural gas and gas condensate in subsoil plots located wholly or partially on the Yamal and Gydansky peninsulas in the YaNAO and used exclusively for the production of ammonia or hydrogen.
At the same time, it is envisaged that regional laws will establish a reduced income tax rate for companies producing ammonia and hydrogen at new facilities in Yamal and Gydan.
The adoption of the law will not require additional expenses from the budget, since the MET and income tax benefits apply to organizations producing ammonia and hydrogen at new production facilities commissioned after January 1, 2025.
Novatek is working on the projects of the Ob GCC and Ob LNG in Yamal. They are planned to be combined into a single complex, the raw material base of which was the Verkhneteuteiskoye, Zapadno-Seyakhinskoye, Arkticheskoe and Neytinskoye deposits. The capacity of the two lines of the Ob GCC was planned to be at least 2.2 million tons of “blue” ammonia per year and about 130,000 tons of hydrogen for the needs of Novatek. LNG production was planned in the amount of 5 million tons per year. The implementation of the Obsky GCC has been suspended for the time being, the investment decision on the Obsky LNG is expected in 2023.
