Kremlin: Issue of private firms' access to offshore oil hinges on performance guarantees

The Kremlin has warned that, if planned legislation to allow private companies to develop Russian offshore oil and gas fields becomes law, performance guarantees will be the main condition for giving such permission.

The state "is in a position to have such guarantees," said President Vladimir Putin's spokesman, Dmitry Peskov. "As regards private companies, such guarantees are very hard to obtain. And this must naturally be taken into account in dealing with this matter."

Peskov confirmed that the Kremlin had received a letter from the chief executives of Russia's state-controlled natural gas giant Gazprom and state-owned oil company Rosneft, Alexei Miller and Igor Sechin, in which they expressed anxiety about the planned legislation.

Letting private capital into offshore fields "may seriously harm and slow down the implementation of the state policy" on offshore oil and gas projects because the purpose of the proposed legislation is "not the development of the continental shelf but the recapitalization of private companies that have foreign capital in them," Miller and Sechin said in their letter.

"This matter is being analyzed at the moment," said Peskov.

"The key point there is that, in the case of state companies, investment programs to develop various parts of the shelf are implemented in a guaranteed way," he said. "As regards private companies, such guarantees are very hard to obtain."

The head of the audit department of the president's office, Konstantin Chuichenko, replied to Miller and Sechin, saying in part: "If it is decided to keep the current practice of the shelf being developed solely by state companies, if would be possible to link the issue of licenses to them for the use of parts of the continental shelf to their investment programs. This would enable state companies to develop individual parts of the continental shelf efficiently and on a much larger scale pending the creation of a necessary infrastructure access of private companies."

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