The Russian government has approved a bill to provide tax breaks for new production facilities for ammonia/and or hydrogen on the Yamal and/or Gyda peninsulas in the Yamalo-Nenets Autonomous District in northwestern Siberia, according to an Interfax report this week, citing the government press service.
The bill would provide a zero mineral extraction tax (MET) rate for the production of gas and condensate at fields completely or partly located on these peninsulas, as well as a reduced profit tax rate for taxpayers who produce ammonia and/or hydrogen at new production facilities exclusively from gas or condensate extracted at these fields.
According to the report, citing a memo attached to the bill, the current return on projects to produce ammonia and/or hydrogen from gas extracted on the Yamal and Gyda peninsulas “is estimated at less than industry values, which does not make it possible to fully begin production of these commodities.”
At present, there is only one known project to produce hydrogen and ammonia in the Yamalo-Nenets Autonomous District. That is Russia’s largest independent natural gas and LNG producer PAO Novatek’s project based on the Obsky Gas Chemical Complex, which holds the licenses to develop the Verknetiuteiskoye and Zapadno-Seyakhinskoye fields on the Yamal peninsula.
Novatek completed the pre-FEED study last year for the chemical complex, where it plans to produce 2.2 million mt/y of ammonia and 130,000 mt/y of hydrogen (GM Feb. 10, p. 30).
In late 2021, the Russian company signed a term sheet with Germany’s Uniper SE on the long-term supply of 1.2 million mt/y of low carbon ammonia from the proposed complex to the German and Northwest European markets (GM Jan. 7, 2022).
In February 2023, Novatek also inked a nonbinding MOU with India’s Deepak Fertilisers and Petrochemicals Corp. Ltd. for the supply of low-carbon ammonia and liquefied natural gas (LNG) (GM Feb. 10, p. 30).