Russian govt introduces amendments to subsoil law allowing sale of exploration licenses, private investment during early exploration

MOSCOW. July 10 (Interfax) - Russian government has submitted amendments to the Law on the Subsoil to the State Duma that would allow companies to sell exploration licenses as well private investment in regional stages of exploration, according to the government's website.

The bill, drafted by the Natural Resources Ministry, proposes two new incentives for exploration. The first allows the sale of exploration licenses without the need to confirm property or corporate ties between the investor and subsoil user. The second admits private companies to the regional stage of exploration, which is usually carried out and financed by the state.

"Today it is only possible to sell a license by selling the actual company that owns it. Because of this, large holdings are forced to acquire hundreds of legal entities to which purchased licenses are registered. In order to rule out possible speculation, the law requires the absence of violations on licenses for two years and simultaneous transfer to the investor of approved documentation on exploration of the whole resource property and all existing geological information," Natural Resources Minister Alexander Kozlov said earlier.

Given the importance of the regional stage of exploration, access to this work will only be granted to Russian companies with at least five years of exploration experience and no violations for two years preceding the filing of the application. A procedure will be approved for the joint implementation of this stage by Federal Subsurface Resources Agency institutions and private investors.

The bill is expected to nearly double the annual growth of Russia's regional exploration maturity to 1.5% from 0.7%, and increase the number of prospective properties discovered annually to about 100 from about 40.