Liberalization of companies' access to Russian shelf excluded from national competition development plan

MOSCOW. Feb 1 (Interfax) - The government has removed the idea of liberalizing access to the shelf from the National Plan (the roadmap) for the development of competition in Russia from 2021-2025.

In a government order signed by Prime Minister Mikhail Mishustin and posted on the legal portal, it is reported that the "subposition regarding expanding access to organizations with the necessary experience and financial resources as potential users of areas of the unallocated subsoil fund of federal significance on Russia's continental shelf is excluded from the road map."

This refers to the idea of shelf liberalization, actively developed in 2019-2020 on the initiative of Deputy Prime Minister Yuri Trutnev. At the end of 2019, the Ministry of Eastern Development introduced a bill to the government that provided for the introduction of a new system for granting subsoil use rights on the shelf, in particular, the admission of private investors, as well as an expanded list of benefits to stimulate shelf development. Then, in 2020, the Development Strategy for the Russian Federation Arctic Zone through 2035 was approved, which assumed that a new shelf development model including the admission of private investors would be introduced before 2024.

Meanwhile, the topic of shelf liberalization has always caused controversy in the oil and gas industry, with companies and ministries expressing opposing positions regarding this idea. In 2021, the coronavirus pandemic slowed down progress on the topic, and in recent years, the intensification of shelf development has ceased to be a priority for the oil and gas sector.

The idea of liberalizing the Russian shelf has been raised for public discussion several times over the past several decades, but has never been fully realized. In recent years, the Ministry of Natural Resources has made a number of changes to legislation that have permitted private companies to obtain hydrocarbon subsoil areas of federal significance in Russia's internal waters and territorial seas (the so-called transit structures). In addition, private companies can become partners in the development of shelf areas under the service risk agreement mechanism. However, according to the Subsoil Law, only state-owned companies with five years of experience on the Russian shelf may develop the Russian shelf. In fact, only two companies have the right to operate on the shelf: Rosneft and Gazprom .