Uranium, Russia Oil and Gas
The Government has allowed Russian investors to conduct geological exploration and production at areas of federal importance till the completion of prospecting. Previously, companies had to wait for five years until prospecting licenses would expire, and ask for permission to develop from the Government. Market participants support the changes, hoping to benefit from projects earlier. The access to strategic areas for foreign investors is limited for a while, but the Ministry of Natural Resources plans to simplify it too.
On October 28, the Prime Minister Dmitry Medvedev signed a decree (published on Tuesday), according to which Russian companies are entitled to conduct geological exploration and production at areas of federal subsoil before the completion of geological study. According to the explanatory note, the decision removes the contradictions between regulations, which defined this order in different ways: the regulation, approved by the Government in September 2008 and Article 6 of the Federal Law "On Subsoil". The decree also introduces a mechanism for attributing subsoil users to Russian or foreign ones through submission of documents to Rosnedra and the FAS. Now companies, controlled by foreigners, can obtain access to strategic fields with the permission of the Government.
The government may ease operation conditions of foreign state-owned companies in Russia. Until now, they could get in projects of strategic deposits development in the country not more than 25%. Primarily, this liberalization aims to attract investors from China, India and the Middle East. Primarily state-owned companies conduct international expansion just in these countries, and Russia will reorient to partnership with them in condition of conflict with the West over the Ukraine.
The Government has instructed the Ministry of Natural Resources, Ministry of Economy and FAS to consider whether to give foreign investors the opportunity to increase their share in companies, which develop subsoil plots of federal importance (large deposits of oil, gas, gold, nickel, platinum and copper) in excess of the limit, set by the legislation. This topic was raised by CEO of Metalloinvest Andrei Varichev at the Cabinet’s meeting on July 10; he offered to amend the law "in terms of increasing the possibility of the presence of foreign investors – certainly, through consideration by the Government Commission - from 25% to 49%". According to him, such measures are necessary for the development of large deposits, in particular to attract project financing.
Now, according to the federal law 57, there is a special procedure of foreign investments in companies that hold licenses for subsoil plots of federal importance. These companies are considered to be controlled by a foreign investor if it has a share of 25% or more.
Over the last five years, 250 oil and gas fields were discovered in Russia, the Natural Resources Minister, Sergei Donskoi reported at the Cabinet meeting today.
According to Sergey Donskoy, it is provide to increase the main types of minerals: more than 6 billion tons of oil, 12.6 trillion cubic meters of natural gas, more than 7 billion tons of coal and about 100 tons of uranium by 2030l this will enable to reach 100% compensation of the main types of extracted minerals with reserves.
In 2013, the state funding was 32.1 billion rubles, and money from non-budgetary sources - about 240 billion rubles. "This corresponds to the global trend of increasing spending of subsoil users on geology, and without a doubt, "covers" our current needs, - Sergey Donskoy explains. - But it should be borne in mind that our subsoil users investments are a much smaller share of revenue from fields development into reserves replenishment, than their foreign and transnational counterparts".
The total increase in oil reserves will be over 6 billion tons, natural gas reserves - 12.6 trillion cubic meters, coal - over 7 billion tons and uranium - 100 thousand tons by 2020, Minister of Natural Resources and Environment, Sergei Donskoy reported at the Government Hour in the Federation Council on May, 28.
As the Ministry of Natural Resources’ press centre reports, Donskoy noted that over the past 5 years the expanded reproduction of hydrocarbon reserves was noted, and the major part of them was registered due to geological exploration and new discoveries, not because of the reserves revaluation.
According to Ministry of Natural Resources and Ecology of Russia, Sergei Donskoy, in 2013 the amount spent on the exploration of solid mineral resources in Russia fell by 30% to 39.4 billion rubles.
At the same time, in 2013, the expenses of non-budgetary sources for reproduction of Russian mineral resources base increased by 37% as compared with 2012 to record level of 307.4 billion rubles. At the same time, costs of hydrocarbons exploration grew 1.5 times to 268 billion rubles.