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RIA Novosti: Decision on holding to develop offshore deposits possible in Q1

19:01 | 31/ 01/ 2007 

ST. PETERSBURG, January 31 (RIA Novosti) – A decision on whether to set up a state holding to oversee the development of Russia’s offshore oil and gas deposits could be made in the first three months of 2007, a deputy natural resources minister said Wednesday.

Russia has moved to tighten state control over its mineral resources in recent years, cutting foreign participation in the oil and gas sector. State-controlled giants Gazprom [RTS: GAZP] and Rosneft [RTS: ROSN] have been appointed to control all hydrocarbon deposits on the continental shelf.

Alexei Varlamov said the idea of establishing a national holding, or tasking the two companies with setting up subsidiaries “to fulfill those national objectives”, was currently under discussion.

“The Natural Resources Ministry has drafted a plan for shelf development, and submitted its proposals on the matter to the government and the [presidential] administration,” Varlamov said.

The Russian government approved in general terms Wednesday draft laws on foreign investment in the country’s strategic assets, which among other restrictions stipulate that foreigners should only be able to buy controlling stakes in energy, military-related and other enterprises classed as “strategic” with the permission of a government commission, and after approval from the Federal Security Service (FSB).

Russian officials say the measures aim to make mechanisms of state control over energy deals more transparent and understandable to foreign investors, and ensure the country’s security and interests in sensitive spheres. However, critics say the decisions could harm Russia’s investment climate.

Last year, Russian authorities applied pressure to reduce foreign companies’ shares in oil and gas projects being implemented under production-sharing agreements allowing for major tax and other privileges.

In December 2007, natural gas monopoly Gazprom acquired a 50% plus one share in the Sakhalin II liquefied natural gas project off Russia’s Pacific coast for $7.45 billion. Up until the deal, operator Royal Dutch Shell had come under months of intense pressure from environmental regulators for large-scale ecological destruction caused in the region.

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