Russian govt proposes establishing MET benefits from 2030 for gas, condensate produced from HRR reserves

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A source familiar with the text of the amendments to the Tax Code earlier told Interfax that the Finance Ministry proposed introducing a reducing HRR reserves coefficient for…

MOSCOW. Nov 12 (Interfax) - The Russian government has approved amendments to the budget package for the second reading, among which it is proposed to establish the possibility of applying a reducing coefficient to the amount of calculated mineral extraction tax (MET) from January 1, 2030, in order to stimulate the development of hard-to-recover (HRR) gas and gas condensate reserves, according to materials on the Russian Finance Ministry's website.

A source familiar with the text of the amendments to the Tax Code earlier told Interfax that the Finance Ministry proposed introducing a reducing HRR reserves coefficient for deposits if their permeability is less than 1 × 10-3 square micrometers and they are classified as Achimov or Jurassic productive deposits, as well as for Turonian deposits or deposits of the Berezovkskaya Formation. The subsoil block must be located fully or partially in the Nadym, Purovsky and/or Tazovsky districts of the Yamalo-Nenets Autonomous District. The coefficient is expected to be calculated separately for each deposit.

For the first category of deposits, the coefficient is zero for the first three years then 0.1 for years 4-6, 0.2 for years 7-9, 0.3 for years 10-12, and 0.4 for years 13-15, after which it becomes 1.

These coefficients take effect from January 1 of the year following the year in which the depletion rate of gas reserves in the relevant reservoir first reaches 1%, but not before January 1, 2030. If the depletion rate has already reached 1% as of January 1, 2029, the tax incentive does not apply to total production, but only to volumes extracted from wells that meet the following criteria: they were commissioned after January 1, 2029; they were not included in the project documentation effective as of January 1, 2026; and, at the beginning of the tax period, they have a confirmed permeability of less than 1 × 10-3 square micrometers.

For gas from Turonian deposits or the Berezovskaya Formation, the HRR coefficient would be zero…

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