The Federation Council has approved a bill barring foreigners from developing Russian subsurface resources

On 22 June 2022, the Federation Council approved bill No. 33 098−8, which makes amendments to the Law of the Russian Federation "Concerning the Subsurface". A key change is the closure of access to subsurface development to foreign entities.

Changes to the list of subsurface users

Under the current law, permission to use Russian subsurface sites may be granted to business entities, including members of a simple partnership, and foreign citizens and companies. The use of subsurface sites of federal significance is reserved for legal entities established in accordance with Russian law (some exceptions apply)[1].

Once the law is passed, only Russian legal entities and private entrepreneurs with Russian citizenship will be permitted to operate as subsurface users. To help bring this about, a “transitional period” will be implemented with a view to eliminating foreign subsurface users.

Specifically, within 30 days of the law coming into force, the federal subsurface development agency, Rosnedra, will notify foreign entities of the need to transfer the right to develop a subsurface site to a Russian legal entity and to transfer to the latter such property and property rights as are needed to carry on licensed activities.

Within 90 days of receiving the notification from Rosnedra, the foreign entity concerned must establish a Russian legal entity through which to continue activities at the site in question and submit an application to transfer its licence to that entity.

If, when mineral development rights are transferred, agreement is not reached on the terms of transfer of property and property rights, those terms will be established by decision of an arbitration court in the area where the subsurface site is located.

Other changes

Regional authorities will not be required to hold auctions to license the use of subsurface sites of local significance to explore for and extract common minerals for use in the construction and overhaul of public railway infrastructure. The list of facilities for which subsurface sites may be made available without holding an auction will be approved by the Government.

Implications

Failure to comply with the above-mentioned procedures and/or time limits related to the transfer of rights to develop subsurface resources in Russia may result in the early termination of those rights.
The law will come into effect from the date of its official publication. The text of the bill can be viewed by clicking this link.