Russian Ministry of Natural Resources wants to open shelf to foreign companies
On 30 March, Deputy Minister of Natural Resources, Sergey Donskoy, stated that if the government wanted to stimulate the development of Russia's shelf, it should adapt the existing legislation and expand the list of companies that are allowed to work on the Russian shelf. Other Russian companies that dispose of financial and technical resources should be given access to the shelf, Donskoy argued. Although Donskoy is in favour of giving foreign companies access to the shelf, he noted that foreign companies should not be given controlling shares, i.e. not more than 50%. Controlling shares in shelf projects should remain in the hands of Gazprom or its subsidiaries.
Donskoy also proposed to liberalise the exploration of Russia's shelf. Under the current legislation, shelf exploration is part of the license to develop offshore blocks. Donskoy proposed to decouple these rights and allow any interested party to explore offshore blocks. In return, companies that discover new oil and gas fields should be duly financially compensated or offered a non-controlling share in a consortium controlled by state companies. Donskoy illustrated that if Rosneft and Gazprom continue to rely on their own resources, they will need at least 165 years to develop Russia's shelf - in the most optimistic scenario.
The Minister of Natural Resources, Yuri Trutnev, suggested that licensing for the development of oil fields and gas fields on Russia's shelf should be separated considering that the situation on the global markets for gas and oil differs significantly. Given the low demand on global gas markets, there is currently no need to stimulate the development of gas fields on Russia's shelf. Demand for oil, however, is growing and therefore a liberalisation of legislation concerning oil fields is justified, Trutnev added.
EEO Focus: For now, the Russian Ministry of Natural Resources remains the only state entity that is asking to open up Russia's shelf to Russian private companies and foreign companies. Not surprisingly, Russia's largest oil company Lukoil and foreign companies like TNK-BP and Shell share this view. Rosneft and Gazprom simply do not dispose of sufficient financial and technological resources to develop the Russian shelf. Until now, only the Ministry of Natural Resources supports an adjustment of the Law on Subsoil Use. This will be hardly sufficient to push through the changes in Subsoil legislation. It is therefore interesting to keep track statements of similar statements being expressed by other state organs that could signal a policy shift could be in sight.
