Russia to consider tax incentive for LNG projects

Moscow (Platts)--9Nov2005

Russia plans in late November or early December to consider scrapping
statutory exports duties for liquefied natural gas in a bid to attract
investments in the country's upcoming LNG projects, a spokeswoman with the
economic development and trade ministry said Wednesday. 
     On Tuesday, the commission on protective measures in foreign trade
already discussed Gazprom's initiative to lift export duties for LNG, which
Russia does not produce yet. The measure is expected to raise investment
attractiveness of the country's LNG projects, which currently are on the early
stage of development, the spokeswoman said. 
     She added it might take time for the duties to be actually abolished as
the gas monopoly is yet to submit business plans for LNG projects. 
     Gazprom's primary LNG development is Shtokman gas field in the Barents
Sea, where the gas giant plans to build a liquefaction plant and start
supplies of LNG to North America in 2010.
     An option of constructing an LNG plant in the Leningrad region is also
being considered.
     The finance ministry supports the proposal to abolish the LNG duty, which
now amounts to Eur40 ($47)/mt, Alexander Sakovich, the ministry's official in
charge of customs duties said, adding that "attracting investments is
crucial." 
     "Gazprom has said LNG will be over-the-balance gas, which will not affect
domestic supplies and exports of natural gas," he said. 
     Sakovich added that the planned move was in line with the government's
plans to gradually abolish export duties.

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