February 17, 2011
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Shotkman Profitable Without Regard to Tax Relief

The Shtokman project is feasible and profitable in any case, but tax reductions will be appropriate, a source in Shtokman Development says.

As an answer to Statoil’s statement that the Shtokman project is not economical justifiable with today’s Russian tax policy, a source in Shtokman Development says to Russian Business Consulting that the project feasibility study shows that a development of the Shtokman gas condensate field is technically feasible and profitable.

The representative from the development company added that such a large project will need special framework conditions and that tax relief from the Russian Government is expected to come.

"It would be appropriate to give additional benefits to Shtokman, directed at compensating the involved companies’ expenses for development of infrastructure that will benefit the whole region, make future shelf projects easier and act as stimuli for the development of the Murmansk region", the source says.

As Barents Observer reported, President of Statoil Russia Jan Helge Skogen last week said that a realization of the Shtokman project will require considerable tax relief from the Russian Government and that the investments needed in infrastructure makes the project economic unjustifiable in combination with Russian tax policy.

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