OREANDA-NEWS. September 22, 2010. The Finance Ministry has published a draft proposal of changes to the Russian Tax Code on its website. In particular, the Ministry has proposed that greenfields located above the 65th parallel in the Yamalo-Nenets region should be given oil MET holidays for 10 years (15 years in the case of the combined production and exportation license) or when the cumulative oil output from a particular field has reached 25MMt (~182MMBBL), whichever comes first, reported the press-centre of OTKRITIE Financial Corporation.

View: We believe the news is positive for Gazprom, Gazprom neft, TNK-BP and Slavneft (jointly controlled by TNK-BP and Gazprom neft). These companies control the majority of undeveloped oil reserves in the Yamalo-Nenets region. In particular, Gazprom neft and TNK-BP control a group of Messoyakha fields, whereas Gazprom could produce oil from its large gas fields located in the region, including Urengoy. In addition, TNK-BP controls the large undeveloped Russkoye field, which would be subject to the proposed MET break. Given that these fields are not developed, it is difficult to quantify the potential impact on the abovementioned companies (the upside looks somewhat distant at this stage).