No. 4, 2009

The Government of Russia has introduces substantial legislative amendments to enhance the effectiveness of natural resource use on the continental shelf

At the beginning of July 2009, amendments drafted by the RF Ministry of Natural Resources and Environment to the Federal laws on the Continental Shelf of the Russian Federation, on the Internal Sea Waters, Territorial Waters and the Contiguous Zone of the Russian Federation and on the Exclusive Economic Zone of the Russian Federation were approved at a session of the Presidium of the Government of Russia.  These amendments offer a real opportunity to eliminate the current obstacles and barriers and carry out efficiently production operations in the Russian sectors of the continental shelf. 

The amendments to the federal laws approved by the Government of the Russian Federation are designed to attain three basic goals.  First, the new rules will help remove administrative barriers to the use of natural resources on the continental shelf.  Second, the amendments will eliminate gaps in the legal framework concerning drilling operations, laying underwater cables and pipelines, and moving and dumping soil on the seabed.  Third, the draft law will harmonize the requirements on protection of the marine environment with Russia's environmental legislation and its international obligations in this field.

Let us recall that in 2008 alone, as a result of geological survey work on the continental shelf, hydrocarbon resources amounting to over 4 billion tons of conventional fuel were discovered.  The federal executive authorities concerned are currently drafting a State Program to survey and develop the continental shelf of the Russian Federation.  Implementation of this Program will make it possible to study and develop the offshore mineral resources potential and, at the same time, expand the transport infrastructure and promote the growth of the ship-building industry, while abiding by the requirements of environmental safety when operating under the conditions of the fragile ecosystem of the Arctic region.

The resource potential of the shelf, amounting to over 100 billion tons of conventional fuel is estimated as being equal to the entire initial potential of the continental part of Russia.  Its development creates conditions for a significant rise in internal demand, advance of science-intensive technologies, growth of the ship-building industry, and expansion of the market for drilling and seismic exploration equipment. 

The effective legislation governing the relations between the natural resource user and the government during operations on the continental shelf holds back the progress in studying, surveying and extracting mineral resources.

To carry out drilling on the shelf, build artificial islands and other structures associated with natural resource use, companies have to undergo complicated procedures to obtain a multitude of permits. 

The amendments proposed by the Ministry of Natural Resources and Environment resolve the problem of administrative barriers in obtaining permissions and licenses.  We eliminate the need to obtain separate permits for performing drilling work, building artificial islands, structures and installations, laying underwater cables and pipelines for natural resource use purposes.

The right to perform drilling and other type of operations is given by a natural resource use license, while the terms for exercising it are provided for in the design documentation for development of marine fields.

Taking into account that design documentation has to undergo a state environmental impact assessment before it is approved, the observance of the environmental requirements will be taken care of by the Ministry of Natural Resources and Environment when the administrative barriers are lifted.

An equally important package of proposed amendments concerns elimination of gaps in the legal framework for drilling operations, laying of underwater cables and pipelines and moving and dumping soil on the seabed.  The amendments under consideration secure the key conditions for performance of offshore drilling jobs.

The draft law also envisages that no additional permits will be required for extraction and movement of earth during creation and use of artificial islands, erection of installations and structures and during the laying of underwater cables and pipelines.

In addition, it is proposed to make the Government of Russia responsible for issuing permits to perform drilling jobs and lay underwater pipelines for purposes other than natural resource use.

One specific question is harmonization of environmental requirements.  Currently, the laws of the sea establish various requirements relating to protection of the marine environment, some of them being not in line with this country's legislation on environmental protection and the new water legislation of Russia.

The draft law envisages securing in the laws of the sea general (unified) requirements on protection of the marine environment, complying with Russia's environmental legislation and its international obligations.  In addition, provisions on standardizing the quality of the marine environment are brought in line with the requirements of the Water Code of Russia and the Federal Law on Environmental Protection.

We suggest removing the general rules of a regulatory nature envisaged by the relevant Russian legislation from the federal laws under consideration.

We are convinced that the proposals made by the Ministry for Natural Resources and Environment of Russia for amending the legislation will provide for more effective use of natural resources, observance of the requirements for protecting the marine environment and growth of the country's extractive industries.

The draft law has been agreed with the departments concerned of Russia, including the Ministry of Defense, the Ministry for Industry and Trade, the Ministry of Energy, the Ministry of Transport, the Federal Security Service, the Federal Customs Service, the Ministry for Economic Development, the Ministry of Finance, the Ministry for Regional Development, the Ministry for Education and Science, the Federal Fishing Agency, and the Ministry of Justice.  The State Law Administration of the President of Russia has issued a positive opinion of the draft law.  It should be noted, in particular, that passing of the draft law does not envisage any increase in federal budget outlays.

It is quite clear that implementation of the draft law will necessitate adoption of a whole package of government bylaws, including those regulating the procedure for issuing permits to perform drilling operations and lay underwater cables and pipelines.  Drafts of such documents have already been drawn up by the Ministry for Natural Resources and Environment and have been duly submitted to the Government for consideration.