Farsighted Moscow Fuels LNG Race With Billions in Tax Rebates
Farsighted Moscow Fuels LNG Race With Billions in Tax Rebates by Irina Slav for Check Point Asia
Smart. Take in less now, to take in more in export taxes later. Know any other gov’t able to restrain its short-term greed in this way?
Novatek, Russia’s largest private natural gas company, will receive a tax deduction of about US$600 million (40 billion rubles) from the regional budget of Yamal-Nenets and US$1.5 billion (100 billion rubles) from the federal budgetto build an LNG export terminal in the autonomous region in northwestern Siberia, Russian daily RBC reported this week.
The information, which was confirmed by Novatek, is the latest indication that Moscow is doubling down on liquefied natural gas at a time of growing demand for the commodity that will inevitably displace a portion of demand for one of Russia’s top export commodities, oil.
Novatek, which last year overtook Gazprom in market capitalization, operates the Yamal LNG plant, which has a nameplate capacity of 17.4 million tons annually, and is building the Arctic LNG plant, which will add another 19.8 million tons when completed. Eventually, Novatek plans to operate total annual liquefaction capacity of 60 million tons.
The Russia company is not going it alone. Its partners in Arctic LNG 2 include Total [French], CNPC, Japan Arctic LNG, and CNOOC [Chinese]. There were many reports that Saudi Aramco would buy into the project, but with 60 percent for Novatek and 10 percent for each of the minority partners, all the stakes have been divided– and Novatek has said it would not reduce its 60-percent holding in the project.
Novatek is widely seen as the spearhead of Russia’s international LNG expansion. Gazprom also produces LNG but on a smaller scale than the private company, for the time being. Earlier this year, in an interview with Bloomberg, Novatek’s chief financial officer Mark Gyetvay said Russia could emerge as one of the top four global LNG producers over the next few years.