Naftogaz: 'new well' notion in royalty reduction bill should be specified
National joint-stock company Naftogaz Ukrainy has said that the notion "new well" in bill No. 5132 foreseeing the reduction of gas production royalty from 14-29% (depending on the depth of the new well) to 12% should be clearly specified.
"The bill foreseeing the reduction of royalty for production of gas extracted from new wells from current 29-14% to 12% does not contain the exhaustive description of the new well notion. This creates opportunities for unfair behavior of gas producing companies," the company said.
Naftogaz believes that the new wells should be the wells where drilling will start after January 1, 2017. It will be confirmed by acts launching the drilling rigs.
"This notion would help to prevent possible abusive practices, in particular, the classification of the wells for which a lion's share of capital investment was sent in the past as new ones, for example, when these wells will be deepened or branch holes are drilled," the company said.
As reported, Ukraine's Verkhovna Rada on December 6, 2016 passed at first reading a bill amending the Tax Code to provide for the balanced revenue of the budget in 2017.
