Rosneft Oil Company, the Ministry of Finance of Russia and the Ministry of Natural Resources and the Environment of Russia have signed an agreement on investment incentives for oil production at the Priobskoye field in the form of an annual mineral extraction tax (MET) deduction of up to 46 billion roubles.
Subject to the agreement, the MET deduction is provided when the monthly average Urals price exceeds the threshold stipulated in the fiscal rule. The agreement has been signed for ten years.
The agreement is mandatory for all parties involved and provides for transparent and easily governed incentive schemes ensuring accelerated field development. The agreement enables Rosneft to expand the drilling footage at the Priobskoye field and increase tax revenues for the national budget.
The 460 billion roubles of investments provided by the government supported by additional Rosneft investments are to be allocated for oil production development at the Priobsky license area. Maintaining and further expanding the drilling footage at the field will ensure incremental production of more than 70 million tonnes by 2030, as well as additional tax revenues at the MET and export duties in the amount of over 500 billion roubles. The budget impact turns to be positive in 2021 already due to the incentives provided.
The successful implementation of the incentives project for the Priobskoye field will provide massive synergy for the nationís economy through an increase of gross output of all additional manufactured products and services of at least 9.3 roubles per one rouble invested. The intensive development of the Priobskoye field will help to maintain Russiaís leadership on the crude oil market, create technologically advanced workplaces, and give a new impetus to the development of the whole complex of production and service industries.
Note for Editors:
The Priobskoye field is the largest oil field in Khanty-Mansi Autonomous Area-Yugra, which has a complex geological structure and is considered to be multi-zone and low productive. The Priobsky license area developed by Rosneft Oil Company has initial recoverable reserves of 1.6 billion tonnes and its current recoverable reserves amount to 1.2 billion tonnes as of January 1, 2019.
The field was discovered in 1982 and put into development in 1988. The cumulative output has exceeded 430 million tonnes of oil.
About 25 million tonnes of oil is produced at the field annually, which account for 4.5% of the total Russian production.