The Russian Finance Ministry has resolved with the Ministries of Energy and of Economic Development all disagreements relative to a proposed bill to stimulate the production of oil and gas on the Russian continental shelf, leaving only the issues related to customs regulations, said Deputy Finance Minister Sergei Shatalov. A new tax system has been developed providing for a series of tax incentives, which are supposed to make shelf projects economically attractive. Within the framework set up in the new law, the projects will be differentiated into four groups, depending on the offshore location where the deposits of hydrocarbons are located. The measure differentiates fixed rates of the extraction tax based on the various offshore zones and sets out the terms of the tax rates’ effectiveness from the date of the operator’s commencing commercial production. For the first type of projects of basic-level complexity, the tax rate is set at 30 percent for five years. For the second type of projects of greater difficulty, the tax rate is set at 15 percent for seven years. The third category of offshore projects of high complexity will be taxed at 10 percent for a term of ten years. Lastly, the fourth category of projects in the arctic will be taxed at five percent for 15 years. The taxation regime is based on the principle of royalties.

The Energy Ministry is waiting to start the new taxation system for the continental shelf effective in the first quarter of 2013.