PRESS: Repsol asks for tax preference for JV with Gazprom Neft

MOSCOW, Dec 18 (PRIME) -- Spain’s Repsol has asked the Russian government to switch Eurotek-Yugra, its joint venture with oil company Gazprom Neft, to the added income tax regime from usual taxation, Kommersant business daily reported on Wednesday quoting sources.

Two sources told Kommersant that the company filed requests to the Energy Ministry and to the Economic Development Ministry, and a source said that the key reason behind Repsol’s request is that the fields operated by Eurotek-Yugra are not profitable under the current fiscal regime. The added income tax should reduce the debt burden during the initial development stage of the fields when costs are high, while production is low, the business daily reported.

Mikhail Burmistrov, analyst at research agency InfoLine-Analytics, told Kommersant that the impact from the switch to the added income tax could amount to no less than 4,000 rubles per 1 tonne of oil, which should total more than 50 billion rubles taking into account the company’s reserves and recovery ratio.

The Energy Ministry, the Economic Development Ministry, and Repsol did not respond to a request for comment, while Gazprom Neft declined to comment. A representative of the Finance Ministry confirmed that the request existed, but added that a decision will only be made after results of the current test run are analyzed.

Gazprom Neft acquired 25.02% in Eurotek-Yugra from Repsol in 2017. The joint venture owned licenses for exploration and development of seven sites in the Khanty-Mansi Autonomous District. In April 2018, Eurotek-Yugra obtained licenses for six sites of the Karabash zone in the region with the production potential of 15–25 million tonnes of oil equivalent.

(62.5326 rubles – U.S. $1)

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