Russian government to draft regulations to revive stalled oil projects

Aug 03, 2000 02:00 AM

The Russian government has promised to draft regulations aimed at reviving stalled oil projects off Russia's Pacific coast, a governor from the region said. Two oil projects off Sakhalin Island -- known as Sakhalin 1 and Sakhalin 2 -- have been long delayed because the government hasn't made clear how to properly regulate foreign investors involved in tapping the reserves there.
Sakhalin Gov. Igor Farkhutdinov said the government would focus on regulating customs and border rules for oil exports. He said Moscow will also push through rules requiring that $ 70 mm in value-added tax illegally collected from investors in both projects be returned. President Vladimir Putin "has asked the government and the ministries to look at developing and approving normative acts without which these projects will continue to work badly," Farkhutdinov said.
The Sakhalin 1 and Sakhalin 2 offshore oil field developments are rich in oil and gas. After initial optimism and talk of a new oil boom, western oil companies involved in Sakhalin projects have been discouraged by Russian bureaucracy, and development on the fields has slowed drastically.
The Sakhalin projects were the first to use production-sharing agreements, which regulate foreign investment in Russian oil, gas and mineral production. Although the Russian parliament has passed PSA legislation, the government has up to now failed say how the laws should be put into practice.

Exxon-Mobil has a 30 % stake in Sakhalin 1, Shell and Marathon Oil have a combined share of 62.5 % in Sakhalin 2, while Japanese concerns have substantial stakes in both as well.

Source: AP via Newspage
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