RusEnergy

11.02.2005 MosNews - Russian companies must abandon offshore practices in order to be allowed to take part in license auctions and to develop the country's natural resource deposits. This information was announced on Friday, Feb. 11, by Russia's Natural Resources Minister Yuri Trutnev who spoke to reporters following his participation in the regular "government hour" at the State Duma. "The Russian companies received a pretext to think about working in Russia and abandoning offshore practices," Trutnev said. He added that the companies would have to participate in the auctions through their subsidiary companies registered in Russia. "I am convinced that the companies are capable of creating subsidiaries on the Russian territory," the minister said. Yuri Trutnev also promised that in 2005 his ministry will develop a special legislative regime for companies developing shelf deposits. "No one is developing the shelf [deposits] in regular tax regimes," he said, because such development activities demand much higher expenses. Trutnev provided examples that the drilling of a wellsite on the ground costs $25-30 million, while doing the same at the sea shelf costs up to $100 million. "If we keep using the measures that we are using now, we will never develop the shelf. In 2005 the Ministry of Natural Resources plans to develop measures for effective development of the shelf," the minister said. Trutnev also added that Russia may receive up to $105-135 billion from the development of shelf lands before 2020.