Rare earth metals, 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.
During formationof geological exploration plans for the medium term it’s necessary to pay more attention to strategic and highly liquid types of raw materials, thematic and research types of work. Head of the Rosgeologiya’s long-term planning department Alexander Karpuzov said this, spoken at a roundtable on "Sustainable development of the industry and economic risks in conditions of sanctions".
The priority in the plan of projects geological exploration through until 2020, approved by the Scientific and Technical Council of Rosnedra, is given to the development of the most popular mineral resources among private companies (oil, natural gas, precious metals, diamonds) and issues of national security, import substitution, development of high-tech and innovative industries are weakly considered, Rosgeologiya notes.
The Russian Prime Minister Dmitry Medvedev has signed the decree on the holding of an auction for the right to use the subsoil site of federal significance, which includes Titanovy-1 at the Yaregskoye field (Komi), in 2014.
The decree was made by the Ministry of Natural Resources.
The document was developed on the assumption of the requirements of the Russian Law “On Subsoil”.
The law implies that the decision to hold auctions for the right to use subsoil areas of federal importance, the composition and procedure of auction fees and the procedures and conditions of such auctions with respect to each subsoil area or group of areas is made by the Government of the Russian Federation.
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.