Prime-Minister Criticises Licensing Procedure in Oil Production

The current licensing procedure in hydrocarbons production is "far from being perfect" and does not meet the level of the economic development, Russian Premier Mikhail Kasyanov said while opening on Thursday the next governmental session.

In his words, the sphere is greatly faulted, numerous court procedures are a norm.

The premier recalled that this oil and gas sector largely determines the economic development accounting for about the half of the GDP growth. The documents submitted for the session show that in 1992-96 more than 60 percent of the oil reserves were granted to mineral resources users free of charge and on a non-competitive basis, the head of the government said. From 1996, licenses for oil and gas production have been granted on a competitive and paid bases, but there still remains a lot to be done. In particular, many licensed deposits are not developed now, as the licensing procedure does not provide for compulsory development, control and incentives.

He said it is necessary to adjust the current legislation to change the situation. He proposed that the government assess the situation and put forward amendments to the current legislation.

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