According to Kommersant and Vedomosti, the Ministry of Finance and the Ministry of Energy are to finalise the proposal for tax relief on offshore projects, with the relief possibly being approved in early 2013 (rather than late 2013, as was previously expected). The Ministries are currently discussing such issues as reliefs for onshore infrastructure, reliefs for imported equipment and sharing losses between licence holders and operators.
Although the news is positive for sentiment, indicating that the government is to support the sector, we do not expect it to trigger any market reaction in the near term. The government has already announced that offshore projects are to be provided with the different tax reliefs to generate more than 16% IRR for the companies (as the then Minister of Energy, Sergey Shmatko, said in March).
Dmitry Loukashov, Alexander Kirevnin, Ekaterina Rodina, Elena Kopylova, Mikhail Zarkhi
VTB Capital analyst
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