Get the latest updates as we post them — right on your browser

. Last Updated: 07/27/2016

Trutnev: Laws of Economics Should Govern Extraction

Natural Resources Minister Yury Trutnev said Wednesday that the state should govern with more economic freedom and stop meddling in the business of getting energy and minerals out of the ground.

Trutnev said he would keep trying to get a new subsoil law passed -- based on economic not administrative rules -- while pushing for reform of oil sector taxation and helping to get exploration and production underway in new regions.

"The state should not take on purely economic functions. ... Bureaucrats should not get mixed up in questions about where to drill a well," Trutnev told a wide-ranging news conference.

Russia scared foreign investors earlier this year when Trutnev unveiled a subsoil bill that threatened to stop foreign companies from bidding for Russia's biggest energy and minerals assets.

The State Duma began examining the proposed law in June, but it swiftly got bogged down, leaving several major resources auctions in limbo.

Trutnev repeated his view that Russia had the right to limit nonresidents' access to Russian resources, but he said it should do so with clear and comprehensible rules. His ministry is proposing that deposits with gas reserves of more than one trillion cubic meters or 150 million tons of oil should be considered as "strategic," with foreign access capped at below 50 percent.

"You can argue about this, but I think it's fair," Trutnev said.

Under his plans, if a nonresident firm finds reserves of "strategic" size, it can receive a licence to develop the deposit only if it sells 50 percent of the project to a Russian entity.

Trutnev also said Russia needed to stimulate the exploration and development of new regions and to improve the performance of existing fields by de-monopolizing the sector.