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Wed, Feb 16, 2005 - Page 12 News List

Russia welcomes foreign investment in offshore oil fields


Russia's natural resources minister said on Monday that foreign companies would be welcome to help develop offshore oil fields, while a senior US diplomat criticized the minister's statement last week that foreign access to oil and gas deposits will be limited.

"Without foreign investment it will be difficult to develop the shelf," the Interfax news agency quoted Natural Resources Minister Yuri Trutnev as saying, referring to Russia's offshore continental shelf.

Trutnev said consortiums including Russian and foreign companies could develop deposits on the shelf, which he said would be crucial for maintaining production after 2015, Interfax reported.

But Trutnev's comment did not appear to contradict his statement last week that only entities in which Russian companies have a controlling stake would be allowed to participate in auctions of strategically important oil and gas deposits.

The pending limitation underscores Russia's desire to tighten control over the nation's vast raw material riches, and analysts said it would chill the investment climate.

Trutnev's statement last week reflects a growing feeling among Russian officials that strategic economic sectors must be kept out of foreign hands and under at least indirect state control, a senior US diplomat said.

The diplomat, who spoke on condition of anonymity, said US officials were trying to determine how the limitation would work and whether it will be put in place, but called it disappointing.

Such limitations could hamper efforts to develop US-Russian cooperation in energy, which is not living up to expectations as it is, and could eventually jeopardize Russia's ability to increase energy production, the diplomat said.

The diplomat said it appeared the limitation could mean that even a 50-50 venture such as TNK-BP, the British oil giant's Russian subsidiary, could be ineligible for auctions.

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