Foreign companies to be obliged to create legal entities in Russia

Foreign companies to be obliged to create legal entities in Russia

June 20, 2022

The relevant bill was adopted by the State Duma in the second reading.

#ARCTIC. #SIBERIA. THIS IS TAIMYR. All non-resident companies claiming to participate in the Russian deposits’ development must register a company in Russia in order to operate within Russian jurisdiction. This was discussed at the government hour’s meeting in the State Duma with the Ministry of Natural Resources’ head Alexander Kozlov’s participation.

The deputies emphasize that the foreign companies’ participation in the Russian deposits’ development, especially hard-to-reach ones, guarantees the use of high technologies that have not been created in Russia yet, despite the import substitution’s policy announced many years ago.

The lack of modern mining technologies in the Arctic is critical today, according to the Duma. According The deputy Alexander Kogan says that the developing deposits’ processes’ dependence on foreign technologies reached 70 percent in the Russian Arctic.

 The developing deposits’ issues, including those in the Arctic, were discussed at the Security Council’s meeting.

A source familiar with the negotiations course said Vedomosti.Ecology:

The officials directly told the Security Council’s deputy head that we don’t have the technologies for the deposits’ development in the Arctic zone. If you use foreign technologies, you need to be aware of the need to accept the foreign developers’ conditions, but if you accept them, then it will be like with the Japanese in projects on Sakhalin now. They take whatever they want from the Russian deposits, but they themselves impose sanctions against Russia, and the project is technologically dependent on them

The same idea was confirmed in the Alexander Kozlov’s speech at the government hour:

We have many deposits in the Arctic. For example, we are world leaders in terms of gas reserves concentrated in the Arctic zone. We have only one problem in production: technology. The imported equipment’s share in the oil and gas sector reaches 70 percent. We have already applied to the Ministry of Industry and Trade to take action.

The Russian Arctic is rich in recoverable natural resources. According to the Ministry of Natural ‘ press service, the hydrocarbon Arctic zone’s resources amount to 25.1 billion tons of oil, 133 trillion cubic meters of natural gas, and 9.3 billion tons of gas condensate. The Arctic accounts for 76 percent of Russia’s natural gas reserves and 28 percent of oil. There are 372 deposits in the Russian Arctic zone. These data are far from final. There are many unexplored deposits in Russia

The State Duma deputy Yury Grigoriev said:

We need to invest in exploration. Financial state support is needed. Rosgeology (Eng.: Russian geology) employed about 200 thousand people in Soviet times and about 15 thousand now. We live on the reserves created in the Soviet era which are drying up now.

It will be difficult to extract hydrocarbons without foreign technologies, and it will take time to develop them.

The expert at the ANO Center for Environmental Innovations Alexander Klimanov said:

We still have hard-to-recover hydrocarbon reserves in the subsoil, and there are few technologies for extraction. So the foreign companies’ withdrawal from the exploration and production sector will be a serious blow to the industry. We are also unlikely to be able to use mining technologies for a long time, because they need to be serviced, and we need new components whose supplies to Russia will be very limited.

The draft law on non-resident companies in the third reading will be considered in the State Duma tomorrow, June 21.

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Text: Ekaterina Maksimova, Photo:

June 20, 2022

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