While Russia’s oil and gas sector has suffered, the recent changes to licensing and the management of the subsoil resources is precipitating renewed investment in the sector. However, this is somewhat overshadowed by the volatility on its border with the Ukraine. Followup sanctions are not yet ruled out, and could dominate investment for some time to come.
February 15, 2022
Former Soviet Union
North Asia bordering the Arctic Ocean, extending from Europe (the portion west of the Urals) to the North Pacific Ocean.
A concession/royalty (called MET)/tax fiscal system is the basis for nearly all upstream licences and joint ventures in Russia. Joint ventures may include Russian oil and gas companies (ROCs), and/or international oil companies (IOCs). The government participates indirectly via its ownership of Gazprom and interests in other ROCs.
The Russian Federation continued to implement regulatory reforms in 2019. However, fundamental structural problems in Russia’s governance of the economy continue to stifle foreign direct investment in the country. In particular, Russia’s judicial system remains heavily biased in favor of the state, leaving investors with little recourse in legal disputes with the government. Despite ongoing anticorruption efforts, high levels of corruption among government officials compound this risk. In January 2020, the Russian government published a privatization plan for 2020-22 that identified 86 federal unitary state enterprises, 186 joint-stock companies, and 13 limited liability companies for privatization over a three-year period.
Source: ESRI, Heritage Index, HMG Foreign & Commonwealth Office, US Department of State, International Trade Administration, International Law Review, Ernst & Young, Wood Makenzie & OGA data.
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