OREANDA-NEWS. March 05, 2010. Ministry of Finance officials told Bloomberg that the government should consider an increase in the mineral extraction tax (MET) on natural gas as a measure to bolster tax revenues from the oil and gas sector, reported the press-centre of OTKRITIE FC.

The Ministry is reportedly seeking to compensate for the nearly RUB60bn that is currently being saved by Russian oil companies due to various tax breaks, including export duty relief for greenfields in Eastern Siberia. The MET rate on natural gas is currently set at RUB147/mcm. Attempts to increase the MET on gas are not new: there have been numerous proposals in the past, but Gazprom has thus far been successful in defending itself against a major tax hike. 

View: We believe the market already factors in future growth in MET rates, at least in line with inflation. Gazprom will strongly oppose a large one-off increase in the MET rate, and therefore we do not expect to negative reaction in either Gazprom or NOVATEK.