Production-Sharing Agreements Should Be Used More Widely to Develop Russia's Gas Fields

Production-sharing agreements should be used more extensively in developing gas fields, according to Viktor Borodai, the deputy chairman of the Duma Committee for Federal Affairs and Regional Policy. Borodai was speaking yesterday at the international 'Production-sharing agreement 2002: from legislation to investment' conference in Moscow. He drew attention to the fact that there are currently three investment projects being carried out in Russia under production-sharing agreements, including two on the Okhotsk Sea shelf and one in the Nenets Autonomous District. Total investment in these projects has already reached USD 4 billion.

Borodai stated that the investment needs of Russia's gas sector are twice as high as those of the oil sector. The Duma deputy calculates that by 2020 Russia will require 660 billion cubic metres of gas annually, a 20-25% rise on today. In order to achieve such a high level of gas production, he believes that USD 180 billion of investment will be required in the sector by 2020. In Borodai's opinion such large sums can only be attracted with the help of production-sharing agreements. He also stressed that in order to attract investors it is necessary to give them access to gas pipelines, which will require amendments to the law 'On major pipelines'.