PUTIN SIGNS OFF ON NEW ARCTIC MASTER PLAN


11/03/2020




Robert HARNEIS -TDO- (FRANCE)- The strategic document plans a massive industrialization of the country's far north for the period up to 2035. It was approved by government and the national Security Council in late 2019 and is sponsored by the Ministry of the Far East and Arctic.

The document covers the period until 2035. According to the Ministry, the new strategic plan pinpoints the country's key national priorities in the Arctic. It strengthens national sovereignty and territorial integrity, promotes peace, stability and mutually beneficial partnerships, and focuses on high life standards for the regional population.

When the policy was first announced in December 2019 Deputy Premier Yuri Trutnev explained during a meeting in the country's Arctic Commission that the President has made clear that he wants annual shipments on the Northern Sea Route to reach 80 million tons by year 2025 and government officials are grappling with this. It is all in line with the wishes of President Putin, Deputy Premier Yuri Trutnev explained during a meeting in the country's Arctic Commission in December 2019.

«What do we have to do to reach the target? » Yuri Trutnev then asked in the Commission meeting and answering his own question calling for a new system of tax allowances for natural resource developers.

On the same day that Putin signed the Arctic document, the country's State Duma approved new legislation on tax reliefs for investors in the region. Legislation that was also authored by the Ministry of the Far East and Arctic. Moscow wants a massive development of oil, natural gas and other natural resources in the Arctic, and the new laws aim to make that happen.

A significant reduction of investors' tax burdens is aimed at developing major new petroleum provinces in remote Arctic waters, across the whole north from the Barents Sea in the west to the Bering Sea in the east.

The new law introduces a new lowered 5 percent production tax on all new hydrocarbon projects, where at least 50 percent of the license area stretches into offshore waters. The tax relief will cover the first 15 years of production. In addition comes a zero-level production tax on oil projects in the East Arctic, including in the area where Rosneft and its subsidiary company Vostok Oil intends to develop a major new oil project.

The law also intends to boost the development of new industries in the region, including in the petrochemical sector, according to the Ministry of the Far East and Arctic.

According to government estimates, the proposed tax incentives will lead to as much as 15 trillion rubles (€216 billion) of new investments in the Russian Arctic over the next 15 years.

The new arctic tax strategy bears the hallmark of the recently appointed Prime Minister, Mikhail Mishustin  , who made his name through his successful policies Director of Federal Taxation. It is also a reflection of Russian economic strength with very low debt, a budget surplus and large financial reserves.


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