Get the latest updates as we post them — right on your browser

. Last Updated: 07/27/2016

Gref to Drop Duties On Hi-Tech Imports

Economic Development and Trade Minister German Gref said Tuesday that the government would temporarily drop import duties on a wide range of high-tech equipment to help Russian firms save cash and modernize production.

The nine-month scrapping of duties -- likely to take effect Feb. 1 and cover 630 out of 1,200 import categories -- will reap an estimated $500 million in savings for domestic industry, he said.

"That would help companies import equipment that isn't produced in Russia," Gref said at a news briefing.

He declined to name specific equipment affected by the decision but said that the oil sector would be among the beneficiaries.

Gref stressed that the measure would be temporary and that Russia was sticking to trade commitments related to its negotiations on membership in the World Trade Organization.

Analysts welcomed Gref's announcement.

"It can be a very effective measure," said Peter Westin, chief economist at MDM Bank. The decision could boost domestic spending on research and development, he said, as well as help increase the competitiveness of Russian companies.

The removal of import duties could be particularly helpful to oil companies as they modernize refineries, said Valery Nesterov, an oil and gas analyst at Troika Dialog.

Gref also said the government was considering temporarily lifting duties on future exports of liquefied natural gas. Although Russia has not yet started production of LNG, state-owned gas monopoly Gazprom has requested exemption from export duties, Gref said.

As the gas giant prepares to start developing the giant Shtokman field in the Barents Sea, it wants to create more attractive investment conditions for the foreign partners that are expected to participate in the project, Gref said.

Gazprom is likely to team up with two or three foreign partners in the $15 billion project aimed at turning Arctic undersea reserves of gas and gas condensate into LNG.

Gazprom has said that in the spring it will make its final selection of foreign partners from a shortlist of France's Total, Norway's Statoil and Hydro, and U.S giants ConocoPhillips and Chevron.

Gazprom has said that the Shtokman project will deliver its first LNG some time in 2010. At the current export duty of 40 euros ($17) per 1,000 cubic meters of gas, Gazprom would make substantial savings, as Shtokman is expected to yield 30 billion cubic meters per year.

Gref said Tuesday that the government was to return to the issue of providing export duty exemption for LNG in about a month, after Gazprom submits a business plan for the project.

It was unclear Tuesday whether Gref's mention of the export duty on LNG meant that the government had already made a decision on how Shtokman is to be taxed -- either under the standard tax regime or under a production sharing agreement, which does not levy export duties.