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Wednesday, April 02, 2008

Kremlin tightens grip on E&P

02 April 2008 - Upstream OnLine - The State Duma, Russia's lower house of parliament, has passed a bill limiting foreign investment in key sectors of the nation's economy - including the upstream industry. The legislation, which also would increase the powers of Russian security services in business transactions, has raised concern among foreign investors, an Associated Press report said. The State Duma passed the bill in its final reading by 384 votes to 55. It now goes to the upper house, the Federation Council, where passage is likely, and to the president for his signature. The legislation stipulates that private foreign companies would need authorisation to buy more than 50% of a Russian company in one of 42 "strategic" sectors. A commission made up of Russian economic and security officials would review such deals. Foreign state-controlled companies would need permission to acquire a stake of more than 25% in a Russian company within the list of major industrial sectors. Those included on the list are either controlled by the Russian state or tied to state interests. The Kremlin has sought to set up state corporations in key industrial sectors, saying a tight government grip is necessary to bolster the economy. It also has pressured foreign oil companies as it consolidates control over the largest and most important hydrocarbon deposits, the AP report said.

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