Prirazlomnoe field development to be expensive with ordinary tax payment

Publish date: September 12, 2005

The price for the Prirazlomnoe oil field development in the Barents Sea will increase significantly, if the project to be implemented without production sharing agreement.

According to the Sevmorneftegaz general director Ivan Chernov, the project development is aimed at the production sharing agreement. “We have contemplated not to pay custom duties for ordered equipment and value added tax during the period of the project implementation”. Nowadays the project costs1.4 billion dollars, Agency of Oil Information reports.

“If they do not sign the production sharing agreement, the company will have to pay sufficient sums, not accounted in the project”, Chernov underlined. He did not comment how high its costs would be if the project is implemented in the frames of the ordinary tax regime.

Sevmorneftegaz relies on the Russian State Duma, which should accept corrections to the Federal Law about production sharing agreement concerning the Shtockman and the Prirazlomnoe fields this year.

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