Foreign Investment in Russian Oil and Gas: Will 2008 Bring New Restrictions?

December 2007
Bloomberg
Marc Polonsky

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For several years now the Russian government has been considering various pieces of legislation that would restrict foreign investment in the oil and gas sector. Recent Russian parliamentary elections held on 2 December 2007, which resulted in the party closely aligned with President Putin winning the majority of seats, seem to indicate that restricting foreign investment in certain strategic sectors, including the oil and gas sector, will remain on the agenda in 2008.

Of particular note is the draft law "On the Procedure for Making Foreign Investments in Commercial Organisations of Strategic Importance to the National Security of the Russian Federation," and certain proposed amendments to the Subsoil Law. While these are still under discussion and their final form is not yet known, they merit close attention to get a sense of their potential impact on foreign investment in the coming year.