Document drafted by the Russian Energy Ministry.
The Agreement between the Government of the Russian Federation and the Government of the People's Republic of China on cooperation on the Yamal LNG project (hereinafter – Agreement) defines the terms of bilateral investment cooperation in the implementation of OAO Yamal LNG and its Yamal LNG project subsidiaries.
The Yamal LNG project includes:
- Exploration and development of the South Tambeyskoye condensate field
- Construction and operation of an integrated complex for the extraction, preparation, and storage of liquefied natural gas
- Construction and operation of port infrastructure in the vicinity of the port of Sabetta
- Sales to China of the liquefied natural gas (hereinafter – LNG) and gas condensate produced under long-term contracts.
Approved bodies for the overall coordination of cooperation under the Agreement are the Russian Energy Ministry on the Russian side and the State Energy Administration of the People's Republic on the Chinese side.
According to Article 342 of the Russian Federation Tax Code, a zero tax rate is established for extraction of natural gas and gas condensate used for LNG production on the Yamal Peninsula.
The Agreement also stipulates that the Russian side provide a favourable tax regime in respect of goods produced and used in the Yamal LNG project, in terms of setting the tax rate of 0% on extraction of flammable natural gas and gas condensate and establishes a zero rate of export customs duty on LNG and stable gas condensate.
Furthermore, in accordance with the Agreement, the Russian side within its competence provides exemption from value added tax on equipment (accessories and spare parts) imported to the Russian Federation that has no Russian-manufactured equivalent.
The Agreement provides for the obligation of the Chinese side to make LNG purchases in an amount not less than 3 million tonnes per year. The terms of the acquisition will be determined by long-term LNG contracts between China National Petroleum Corporation or its affiliated organisations and OAO Yamal LNG or its subsidiaries.
The Chinese side facilitates the provision of loans from Chinese financial institutions to OAO Yamal LNG based on the agreement between China National Petroleum Corporation, OAO Novatek and its subsidiaries for the sale of shares in OAO Yamal LNG, as well as on the basis of loan agreements.
The Agreement is for the period to 31 December 2045.