Russia Drops APG Tax Plan: Report

Russia’s finance ministry has reportedly backtracked on plans to impose a tax on the production of associated petroleum gas (APG), after the proposal met with strong criticism from industry.

The ministry had wanted to apply mineral extraction tax on APG, released as a by-product of oil extraction, to raise rubles 30bn ($470mn) to fund tax breaks granted at Western Siberia’s largest oilfield, Priobskoye. Leading oil and gas producers hit back, condemning the measure as impractical, warning it would weaken their margins and drive up APG costs to consumers.

The ministry has now dropped the plan, and has suggested to the government that the Priobskoye incentives can be funded instead using Russia’s national wealth fund, a ministry official told Moscow-based Kommersant on December 17.