Bloomberg News

Gazprom Says Russian Gas Tax Breaks Too Few to Spur Output

September 04, 2012

OAO Gazprom (GAZP), the world’s biggest natural-gas producer, will lobby the Russian government to expand gas tax breaks to spur investment and boost output.

A number of projects may be barely profitable or may lose money as the government increases extraction taxes, Gazprom said today in an e-mailed statement. Measures offered by the government won’t allow Gazprom to reach a 12 percent rate of return at its Arctic Prirazlomnoye field or the Kirinskoye project in the Far East, it said.

The extraction tax rate should be cut to zero to encourage the development of projects in Russia’s east and possibly for the offshore, the Moscow-based company said.

The Economy Ministry will take a “tough stance” on Gazprom’s demands for more tax breaks, Sergei Belyakov, a deputy minister, told reporters today in Moscow. The state-run company should focus on cutting its expenditure, he said.

To contact the reporter on this story: Jake Rudnitsky in Moscow at jrudnitsky@bloomberg.net

To contact the editor responsible for this story: Balazs Penz at bpenz@bloomberg.net


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