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Itar-Tass: Kremlin aide says Sakhalin Energy must transfer to Russian tax rules

04.10.2006, 20.56
MOSCOW, October 4 (Itar-Tass) – Sakhalin Energy company that develops offshore oil fields under the Sakhalin II energy project, should make an offer on changing over to Russia’s national system of taxation, Arkady Dvorkovich, the director of the Kremlin’s expert analysis department said Wednesday.

This is necessary in the conditions of growing costs of oilfields development, he said while taking the floor at an investment conference dedicated to the 90th anniversary of Russo-British Chamber of Commerce.

Dvorkovich said it was known perfectly well which of the sides had asked for a change of terms of the production-sharing agreement (PSA), under which the oilfields are being developed.

“It was clear from the very start Russia won’t agree to that,” Prime Tass economic news agency quoted him as saying.

If the operator company finds it necessary to abide by the PSA regulations, it must act strictly within the PSA format then, Dvorkovich said.

He believes the government must not get involved in that purely commercial case under any circumstances, although it must control strict compliance with legislation.

Dvorkovich denied the speculations about a campaign of some kind to build up the government’s share in energy projects or the presence of whatever plans to concentrate the entire energy sector in the hands of government-controlled companies.

“All the companies are working on equitable legal conditions,” he said.

PSA regulations stipulate that a company adopting production-sharing terms is relieved of taxes until it gets back all the monies it spent to develop a project.

Sakhalin Energy said its expenses related to Sakhalin II had doubled versus the initially established amount and the date on which it was supposed to begin payments to Russia must be postponed. and its sister non-profit websites,,,,,, and are owned by John Donovan. There is also a Wikipedia feature.

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