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Friday, April 15, 2005

Foreigners welcomed to offshore projects

04-15-2005 RBC News - Participation of foreign companies in the development of Russia's offshore resources is inevitable, Vladimir Kuznetsov, deputy head of the federal energy agency, told reporters on Thursday. He said offshore projects were very costly, some of them estimated at more than $10 billion, and payback periods were long. On the other hand, bringing foreigners into such projects would allow Russia to enter the markets of North America and Asia Pacific region, he noted. Kuznetsov believes Russia has to take part in international consortiums in the third world countries, notably in Africa and Latin America, as well as in the Pacific and Indian Oceans. "Tenders are being held everywhere, and, in order to win, synergy is needed in all areas, from technologies to financing," he stressed. A new law on mineral resources, coming into force in the middle of next year, restricts access of foreign companies to auctions for strategic deposits. Only those companies where foreigners hold a minority stake (not more than 49 percent of authorized capital), will be allowed to participate. In February, the natural resources ministry and the federal agency for the use of natural resources decided to bar foreign companies from auctions for the country's largest deposits in 2005. At the same time, both bodies admit it would be very difficult to develop Russia’s offshore resources without foreign investment, both financial and technological. Earlier this month, natural resources minister Yury Trutnev said his ministry was for allowing foreigners to take part in the development of offshore resources, but only together with a company representing Russia.

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