Russian government softens stance on licensing

January 17, 2014

At a meeting chaired by Vice-Prime Minister Arkady Dvorkovich, the environment ministry suggested amending the requirements to licensing conditions for hydrocarbon development and drawing and exhaustive list of conditions for correcting licensing agreements.

It is planned that the requirements to production volumes for oil, gas and gas condensate will be dropped from licenses. Those conditions will be listed in the draft projects for reserves development. If firms violate project conditions, they are not punished as severely as for violating licensing conditions. At the same time, licenses will continue to contain deadlines for geological prospecting, production start and project preparation.

For firms violating licensing conditions, it was suggested that they be deprived of tax breaks until the licensed blocks reach projected capacity. It is expected that fewer companies will break the rules once the new requirements are introduced. For the time being, the most widespread violations are failures to adhere to geological exploration conditions and seismic studies conditions, drilling deadlines, block commissioning deadlines and minimum production volumes.

Copyright: ProNedra, 2014