::: RUSENERGYLAW Journal ::: #2'2005

RusEnergyLaw JOURNAL • Archive/2'2005

Jon Hines, Alexei Bardin and Alexander Marchenko
Update on Russian Subsoil Development Regime: The Situation for Foreigners under the Present and the Draft New Law

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Zhumageldy Yelyubayev
Some Disputed Issues Concerning the Application of Kazakhstan Tax Laws in the Subsoil Use Field

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William Tompson
Russia's Power Sector Reform: Creating Robust Competition or a Potemkin Market? (Part II)

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Robert McGee
Accounting Certification in the Former Soviet Union and its Importance to the Energy Sector

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Peter J. Pettibone
Dispute Resolution in International Financial Transactions and Project Finance

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Dmitriy Vetlugin
Legitimacy, equity, economy

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Uwe M. Erling and Igor Budantsev
The Kyoto Protocol and its Joint Implementation Mechanism

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Russia

Procedure for performing foreign currency operations and the mandatory sale of foreign currency proceeds: explanations of the Central Bank of Russia

Requirements in relation to the annual report of foreign organizations operating in the Russian Federation (Moscow) for 2004

Assessment and payment of UST: explanations of the Moscow tax inspectorate

Compensation when terminating an employment contract

Federal Law "On the Transfer of Lands and Sites from Category to Category"

New Russian Town Planning Code

LUKOIL Overseas Kumkol B.V. and Turgai-Petroleum filed for arbitration with the Arbitration Institute of the Stockholm Chamber of Commerce with the preliminary amount of claims against PetroKazakhstan Inc. being $100 mln.

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GOTO CURRENT YEAR ISSUES

EDITORIAL

Nikolay Isaakov,
Head of Legal Department, LUKOIL Overseas

Dear Colleagues,

The latest events have caused me to believe that this year could be inaugurated by the adoption of a number of basic laws and other legislative documents that will ma- terially revise terms and conditions of subsoil use in the Russian Federation.

To a great extent, this is a merit of the Russian Ministry of Natural Resources and Minister Yuri Trutnev, who personally headed the recent process of the new draft Subsoil law design. The necessity for a new law matured a while ago, since the basic concept of the current Subsoil law that was adopted in 1992, is completely obsolete at the moment and it cannot take into account certain needs which today’s Russia faces.

It needs to be pointed out, however, that it is not the first attempt to adopt a new Subsoil law. To the best of my recollection, there were many attempts within last decade. However, none of them has had any success and no draft law managed to go further than the State Duma’s entrance.

This time, however, there are certain grounds to believe that this sad tradition will be broken and the new Russian Subsoil law will be properly issued in due course. Ministry of Natural Resources feels optimistic on this and believes that the law will be adopted before the end of 2005. The main arguments, which support such an optimistic approach, are as follows:

1. A new draft Subsoil law designed by the Ministry of Natural Resour- ces has already been approved by the Russian Government, which, in its turn, has already passed it to the State Duma;

2. Current composition of the State Duma is too much politically homogeneous, which was not the case before. Therefore, the current Duma is generally loyal to the Russian President and its Govern- ment; and

3. Russia really needs the new law badly because its absence slows down further development of the Russian mineral resources in- dustry.

It is anticipated that the new law will introduce a number of inno- vations to the Russian subsoil use legal system. Among these I would firstly mention the proposed can- cellation of the subsoil use licen- sing which has been in place in Russia since 1992, and its substi- tution of the contracting system, which is commonly attributable to all civilized countries. It is worth mentioning that Kazakhstan, our CIS. neighbor, switched to the contracting system of subsoil use in 1999.

Naturally, the new draft law is subject to further detailed discus- sions in various public and govern- mental instances and certain alternations and revisions will most likely be incorporated into the current draft. I would, however, express my personal hope that, at the end of the day, the new law will equally reflect both interests of the State and investors and that its issuance will make Russian subsoil use legislation somewhat better.

I am also very confident that upon issuance of the new Subsoil law, RusEnergyLaw Journal will be more wanted by our readers. We strongly intend to go on publishing articles with analysis of the new Russian subsoil use legislation and the first such article you will find in this particular issue.