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AFX Europe (Focus): Russia gives oil companies six months to shape up

Published: Oct 24, 2006

MOSCOW (AFX) – Russia’s natural resources ministry has given oil companies working in Russia six months to update plans for their projects amid a crackdown on foreign and domestic energy companies for alleged environmental violations, news agencies reported today.

“I want to ask companies to promptly make changes to their license agreements … voluntarily introducing terms on the length of time and rules for extraction” for their project licenses, ITAR-TASS quoted Minister of Natural Resources Yury Trutnev as saying.

“I understand that at the initial stage, you may not have known everything about the structure and details of extraction, but now you can come to us with concrete figures about volumes and exploration terms and justify them,” Trutnev told a gathering of oil company executives.

The minister’s proposal came amid a massive campaign of environmental checks and threatened license removals against energy companies.

Russian environmental regulators said today they were considering cancelling licenses for 17 oil companies, including a subsidiary of state oil firm Rosneft.

In spite of the flurry of activity from environmental regulators, the General Prosecutor’s office suggested they were falling down on the job.

“Rosprirodnadzor, Rosnedr and Rostekhnadzor are showing a low level of activity in checking the activities of subsoil users,” Interfax quoted first assistant prosecutor Alexander Buksman as saying Tuesday, referring to the country’s top three environmental agencies.

Threatening to remove licenses without criminally prosecuting companies is “only encouraging the violators,” Buksman said.

Trutnev said he agreed that the agencies were poorly coordinated, adding that certain agency officials may lose their jobs.

An initial wave of pressure against major foreign oil companies such as Royal Dutch Shell, ExxonMobil and Total for alleged environmental violations led to complaints by foreign officials of unfair treatment.

Agencies have since targeted Russian groups such as Rosneft, number one private oil producer Lukoil, and GazpromNeft, the oil-producing branch of state gas monopoly Gazprom.

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