According to Kommersant, the Duma has proposed that gas mineral extraction tax (gas MET) for several types of offshore fields range between 1% and 1.3%. According to the proposal, projects in the Black Sea (with a depth of more than 100m), the North of the Sea of Okhotsk and in part of the Barents Sea would be provided with a 1.3% MET rate for gas. Meanwhile, projects in the Karsk Sea and the northern part of the Barents Sea would be provided with a gas MET rate of 1%.
The initiatives are designed to provide offshore developers with an additional incentive to monetise gas reserves. This mainly helps future LNG projects, which are planned to be supplied with gas from offshore fields. For other projects with a standard gas evacuation plan, the proposal would not cancel the overall oversupply to the Russian gas on the market, plus the substantial investments required to deliver gas to the transportation system. Overall, given the current uncertainties about the resource quality and potential reserves, we believe the news is neutral for the names in our Russian oil and gas universe.