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FAS suggests liberalization for nonresidents

According to mass media reports, already in early March a government commission chaired by Vladimir Putin may consider a package of amendments to the law on access of foreigners to strategic sectors. Proposals are initiated by the Federal Antimonopoly Service that suggests allowing foreign firms and international organizations to buy up to 25% in Russian companies producing natural resources that own licenses to develop subsoil blocks of federal importance without agreeing such purchases with a government commission (currently such permit is required to obtain over 10% of the equity).

Meanwhile, the natural resources ministry has been actively voicing proposals to simplify access of nonresidents to Russian offshore deposits. The ministry's representatives point out that foreign players are greatly interested, although their intentions are deterred by the current legislation that actually makes it possible to transfer new fields to Rosneft and Gazprom only.

The reason for gradual softening of the stance towards foreigners is clear. During the period of fast and continuous growth in oil prices (up to mid 2008) state authorities imagined mostly pleasing consequences of "resource nationalism" expecting expensive natural resources to enable them to retain absolute sovereignty over subsoil and make good profit. Later it turned out that Russian majors had neither sufficient financial resources nor technologies and nor desire to risk by independently developing all blocks obtained. So, a benevolent attitude towards foreign investors was unavoidable and this latest trend is unlikely to be substantially affected even by a possible advance in oil prices following instability in the Middle East.

By Stanistav Mitrakhovich, NESF leading expert

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