The Russian State Duma has passed in the third reading a law that introduces a ban on issuing licenses for subsoil development to foreign companies. In order to continue working they will have to set up legal entities in Russia and transfer them the right to use subsoil areas.
According to the current legislation, subsoil users could be companies, foreign citizens and legal entities. At the same time, the users of subsoil areas of federal significance (except for the continental shelf and PSA, for which separate conditions are prescribed) may be companies registered in Russia. The law adopted in the third reading (N33098-8) provides that subsoil users may be legal entities established in accordance with Russian legislation and individual entrepreneurs who are citizens of Russia.
No later than 30 days from the date the law enters into effect, Rosnedra will have to notify foreign legal entities of the need to transfer the right to use a subsoil area to a legal entity created in accordance with Russian law. Within 90 days from the date of notification, a subsoil user who is a foreign legal entity will be obliged to establish a legal entity in accordance with Russian law to continue operations on the subsoil area granted for use.
Furthermore, the adopted law grants Russian Railways the right to use subsurface areas of local significance for the extraction of commonly occurring minerals (sand, pebble stone, crushed stone) without an auction. It is specified that commonly occurring minerals may be used only for construction work on railway transport infrastructure. The users of these subsoil areas without an auction can also be companies with which the monopoly has concluded a contract to carry out the construction of public railway transport infrastructure facilities. The list of such facilities will be approved by the Russian government.
The law will enter into effect from the day of its official publication.
