RF Government has approved the agreement with China on the Yamal LNG project.
The agreement between the Governments of the Russian Federation and the People's Republic of China sets forth the terms of the bilateral cooperation in investment into the Yamal LNG project.
The competent authorities responsible for the coordination of cooperation under the Agreement are RF Ministry of Energy and China State energy Authority.
Under Article 342 of RF Tax Code, zero tax rate is applied for extraction of natural gas and condensate dedicated for LNG production at Yamal peninsula.
The Agreement also stipulates that Russia is to ensure favorable tax treatment of products produced and used under implementation of Yamal LNG project: zero rate is to be applied for export customs duties in respect of LNG and stable gas condensate.
Besides, Russia is to ensure VAT exemption for equipment imported to the Russian Federation if similar equipment is not produced in Russia.
Under the Agreement, China undertakes to purchase 3 mln t of LNG per year. Purchase terms are to be set forth by long-term contracts between China National Petroleum Corporation (and its affiliates) and Yamal LNG OJSC (and its subsidiaries).
China also ensures granting of credits by Chinese financial institutions to Yamal LNG OJSC under the agreement between China National Petroleum Corporation, Novatek OJSC and their subsidiaries on purchase and sale of Yamal LNG shares as well as under credit agreements.
The Agreement is signed till December 31, 2045.