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Tax relief for Arctic shelf exploration

Published time: April 12, 2012 16:54
Edited time: April 13, 2012 00:24
Reuters / Denis Sarrazin / Center for Northern Studies / Handout

Reuters / Denis Sarrazin / Center for Northern Studies / Handout

Russia is to lift all export duties for new projects in the Аrctic shelf to boost investment into the area. The development of this area will also involve private Russian companies with some co-operations from major foreign ones.

­The country's Prime Minster Vladimir Putin said "there should be special stimulating system of taxation" to develop production in the region. He was speaking at a meeting devoted to the exploration of the arctic shelf. Putin also suggested tax on resource extraction should be around  5 percent from the price of the product for the most difficult projects. Tax relief has been long awaited by the companies, it's one of the reasons the Shtockman gas field development was stalled.

Putin said the measures would held to attract up to $500 billion dollars investment into exploration and extraction of oil and gas in the next 30 years, and another $300 billion in related areas.

The biggest global companies would be welcomed to develop the project, according to the head of the Government, but the bulk of the contracts for providing equipment, services  and geological exploration should go to Russian companies.

At the moment only companies with more than 50 per cent of state capital and more than five years experience can take part in shelf exploration.  Which means that only the country's majors Gazprom and Rosneft can be involved in the projects.  The government says it is considering changes to the law to allow private Russian companies into the region, Russia's arctic shelf is believed to contain up to 100 billion tonnes of oil and gas, but the exploration demands significant resources and technologies due to the severe conditions.