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Navigation

• Chapter 1: Oil and gas resources on the Arctic Con
• 1.1. Russia’s oil and gas industry - a historical
• 1.2. Oil and gas raw material base on the Russia’s
• 1.3. Strategy for developing the oil and gas poten
• 1.4. Oil resources on Russia’s Euro-Arctic shelf
• 1.5. Gas resources on Russia’s Euro-Arctic shelf
• 1.6. Development of offshore oil and gas reserves
• 1.7. Subsoil regulation in Russia
• 1.8. Companies operating on the Arctic shelf
• Appendix I - I
• Appendix I - II
• Appendix I – III
• Appendix I – IV
• Appendix I - V
• Appendix I - VI
• Appendix I - VII
• Chapter 2: Transporting oil and gas in Northwest R
• 2.1. State regulations and strategies
• 2.2. Existing transport systems in Northwest Russi
• 2.3 Navigation
• 2.4. Future plans for oil and gas transport in Nor
• Chapter 3. Environmental risks when extracting an
• 3.1. Environmental risk when carrying out geologic
• 3.2. Environmental risks when exploiting oil and g
• 3.3. The Environmental risk when transporting oil
• 3.4. The state of the environment in the Pechora,
• Appendix III - I
• Appendix III - II
• Chapter 4. Oil and gas accidents – prevention and
• 4.1. Accidents and incidents: causes and consequen
• 4.2. Oil spill classification and responsibilities
• 4.3. Drafting plans for eliminating accidental oil
• 4.4. Eliminating spills
• 4.5 The Barents Sea’s Emergency Rescue Organizatio
• 4.6. Assessing damage and fines
• 4.7. The role of public organisations
• Appendix IV - I
• Appendix IV - II
• Appendix IV - III
• Chapter 5. Environmental impact of oil and gas ac
• 5.1. The Barents Sea
• 5.2. Environmental impact of oil and petroleum pro
• 5.3. The key areas for preserving bioresources in
• Appendix V - I
• Appendix V - II
• Appendix V - III
• Conclusion
• Appendix VI. The future of the northern regions

Appendix I - V

RESOURCES VIEWED AS NATIONAL PROPERTY. THE RIGHTS OF FOREIGNERS

A list of normative and legal acts

Comments by a legal expert

Existing Russian legislation consolidates the rights and responsibilities of foreigners in the sphere of subsoil management. Foreign subsoil users have the same rights and responsibilities as their Russian counterparts, except for several restrictions which are discussed below.

The following constitute normative and legal acts which regulate the rights and responsibilities of foreigners in the sphere of subsoil management:

• The Constitution of the Russian Federation, adopted by a national vote on 12.12.1993 - Articles 9 (Section 2.8), 36, 42 and 58.
• Federal Law No. 2395-1 dated 21.02.1992 “regarding subsoil”: - Article 1.2 reads as follows: Subsoil within the Russian Federation, including the underground expanse and mineral and other resources, constitute State property.

Subsoil areas cannot be bought, sold, given as a present, mortgaged or transacted in any other way under civil law.

The law only allows the transfer of rights to use the subsoil from one party to another to the extent provided for in Article 17.1 of the law (the reorganisation of legal entities, the cessation of their activities and so on).

Extracted mineral resources and other resources may take all forms of ownership (State, municipal, private).

- Article 9 stipulates in concrete terms that parties able to use the subsoil may be foreign citizens and legal entities, provided restrictions are not laid down under law.

• Restrictions for foreigners are laid down in Federal Law No. 187 dated 30.11.1995 “regarding the Continental shelf of the Russian Federation”.

- Paragraph 12 item 6 reads as follows: the Federal State authorities have a right to declare individual areas of the Continental shelf closed to foreign states, natural persons and legal entities in the Russian Federation, natural persons and legal entities of foreign states, and competent international maritime scientific research organisations in connection with the (planned) conducting of activities concerned with the surveying and development of mineral resources and fishing in the areas indicated, with the coordinates for the closed areas notified in the “Instructions to Mariners”.

- Section 4.7 - Granting areas to users is determined on the basis of Russia’s economic interests and is realised in such a way that, other things being equal, preference is given to those users which utilise Russian industry as far as possible.

- Section 5.7 - In the interests of guaranteeing security and the development of industry and energy policy within the Russian Federation by granting licences to interested Federal executive bodies, restrictions can be introduced on the participation of foreign users in competitions (auctions) related to the search for, surveying and development of mineral resources in individual areas, and by making such competitions (auctions) only open to Russian users.

- Section 9.8 obliges foreign users to only carry out regional geological study, exploration, surveying and development of mineral resources in the presence of an official from the bodies concerned with the preservation of the Continental shelf, as set out in Article 42 of this law, and under his supervision.

Foreign users are obliged to effect the free passage of conservation agencies to the place where work is being carried out, and back, to guarantee radio communication, and to bear all the costs associated with the upkeep, accommodation and full protection of officials from these agencies on a level with that accorded their own executives.

Foreign declarants may only use living resources for scientific, commercial and other purposes on the basis of international agreements concluded between the Russian Federation and the State in question (Section 3.11). In this connection, Russian declarants (defined categories) have first choice when it comes to using living resources.

Foreign vessels have additional responsibilities vis-à-vis conservation agencies when fishing (Section 7.14) and carrying out other activities (Section 3.20).

The procedure whereby authorisation is obtained to carry out marine scientific research and to create and use man-made islands, installations and structures on the Continental shelf is somewhat different from that for Russian users (Sections 3.17, 5, 6, and 8.23). Procedural peculiarities are also provided for in Sections 2.28 and 2.35.

• Federal Law No. 225 dated 30.12.1995 “on production sharing agreements” makes provision for the possibility of foreign investment when searching for, surveying and extracting mineral raw materials on Russian territory, as well as on the Continental shelf, under conditions laid down in production sharing agreements which have been concluded with the Russian Government. An agreement of this nature is concluded with the winner of the auction, this party being the participant who offered the highest price for the right to enter into this agreement. The conditions under which the auction takes place must make provision for the proportional participation, to be determined by the Russian Government, of Russian legal entities in the execution of agreements.

The law lays down the conditions under which the work is to be carried out as stipulated in the agreement (Article 7):

- responsibilities on the part of the investor to give preference to Russian legal entities when involving contractors, suppliers and ferrymen;

- a responsibility in terms of ensuring that at least 80% of the workers are Russian nationals when hiring, and that foreign workers are only used in the initial stages or in the absence of Russian workers and specialists;

- a responsibility in terms of ensuring that at least 70% of the total cost of equipment acquired each calendar year is of Russian origin. In this connection, the equipment is regarded as being of Russian origin if it is manufactured by Russian legal entities and/or Russian citizens in Russia from components, at least 50% of the manufacture of which (expressed in terms of the cost) is carried out on the territory of the Russian Federation by Russian legal entities and/or Russian citizens;

The responsibilities indicated apply to both Russian and foreign investors.