The Russian government has implemented a law establishing a zero rate for the mineral extraction tax (MET) for producing gas and/or gas condensate in subsoil areas that are located on the Yamal and/or Gydansky Peninsulas, in the Yamalo-Nenets Autonomous Region (YNAO) in Russia’s Western Siberia, when the gas and/or gas condensate is used exclusively to produce ammonia and/or hydrogen, according to an Interfax report.
The YNAO is the most significant gas producing region in Russia, accounting for approximately 80% of the country’s natural gas production.
Moscow has also established a preferential corporate profit tax for ammonia and hydrogen producers. According to the report, the Russian constituent entities may establish reduced rates for profit tax, subject to crediting the budgets of the respective constituent entities, for taxpayers producing ammonia and/or hydrogen at new production facilities in relation to profits received from these activities. To be eligible, the new production facilities must be launched after Jan 1, 2025.
Russia’s largest independent natural gas and liquefied natural gas (LNG) producer, Moscow-based PAO Novatek, had been working on its first blue ammonia and hydrogen project on West Siberia’s Yamal Peninsula. The company reportedly decided in late 2022 to change the focus of the project back to LNG, however, as per its original project plan. However, this could not be confirmed by Green Markets by press time.
The company announced the Obsky GCC project in 2021, which called for gas to be extracted from two deposits and converted into 2.2 million mt/y of ammonia and 130,000 mt/y of hydrogen (GM Oct. 22, 2021). A pre-front end engineering design study for the project has been completed, with the first stage of the project originally planned for launch in 2026, and the second stage in 2027.
This past September, Novatek was reported to be nearing a final investment decision on the Obsky LNG project, which is the company’s second LNG project.