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. Last Updated: 07/27/2016

Gas Tax Plan Expected in '07

The government will outline proposals on a new mineral extraction tax on gas by the end of 2007 and will likely apply it on a field basis rather than use a flat rate across the industry, an official said Wednesday.

Lev Feodosyev said the tax on gas would mimic the existing mineral extraction tax on oil, which came into force from 2007 and takes into account factors such as field depletion and content of water in reservoirs.

The so-called differentiation is designed to encourage oil firms to tap difficult deposits at a time when production has started stagnating in west Siberia. A zero rate is applied to fields in the untapped region of east Siberia.

The Finance and the Economic Development and Trade ministries had proposed raising the gas tax fivefold by 2010 from the flat rate of 147 rubles ($5.76) per 1,000 cubic meters. But Feodosyev said this proposal was off the agenda.

"We can assume that the new tax will be higher that the current 147 rubles, but concrete figures will be available only after we have fully analyzed the situation," he said.

"When setting the final rate, we will take into account all factors from the price of gas to the launch of new deposits and costs of new production projects," he added.

Gazprom has said the tax should stay low so it can save money for its investments in gas production and help it meet growing demand in Russia and abroad.

Gazprom is already set to benefit hugely from the country's gradual domestic gas price liberalization.