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Russia’s parliament approves tax privileges for China-bound gas supplies

The zero subsoil tax will apply to the Chayanda oil and gas condensate field in Yakutia and the Kovykta gas condensate deposit in the Irkutsk Region

State Duma, the lower house of Russia’s parliament Valeriy Sharifulin/TASS

State Duma, the lower house of Russia’s parliament

© Valeriy Sharifulin/TASS

MOSCOW, November 11. /TASS/. The State Duma (the lower house of Russia’s parliament) approved tax privileges on Tuesday for China-bound gas supplies via the Power of Siberia gas pipeline.

Gas fields located within the boundaries of the Irkutsk Region in East Siberia and the Republic of Yakutia in northeast Russia will enjoy zero mineral extraction tax during the first 15 years of their development, according to the parliament-approved bill.

The zero subsoil tax will apply to the Chayanda oil and gas condensate field in Yakutia and the Kovykta gas condensate deposit in the Irkutsk Region, which are the main resource base for Gazprom’s gas supplies to China via the Power of Siberia gas pipeline.

A zero property tax will also be established for 20 years for the gas pipeline’s facilities. The zero tax will be in effect from 2015 to 2035.

The Power of Siberia gas pipeline estimated at $21.3 billion is intended to pump 61 billion cubic meters of natural gas annually and will stretch over a distance of 3,968 km (2,465 miles).

The pipeline is designed to pump natural gas from the giant Chayanda oil and gas condensate deposit in Yakutia in northeast Russia and the Kovykta gas condensate field in the Irkutsk Region in Eastern Siberia. The Power of Siberia will run along the operational East Siberia - Pacific oil pipeline, crossing marshlands, mountainous and seismically active areas.

The first stage envisages the construction of the Yakutia-Khabarovsk-Vladivostok trunk gas pipeline. During the second stage, the Irkutsk gas production center based on the Kovykta deposit will be connected with the Yakutia center based on the Chayanda field.

The gas pipeline’s first stage is scheduled to be commissioned in 2017.

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