Emboldened by a sevenfold surge in crude prices from 2002 to over $147 a barrel in July 2008, the country had passed laws to curb foreign participation in tapping its mineral resources.
“I believe that today there is a need to think about legislative changes, about investment attractiveness … on investments of foreign companies in the exploration and development of resources,” Trutnev said.
The comment came after Prime Minister Vladimir Putin offered in June surprise deals to Royal Dutch Shell and France’s Total, which analysts said signaled the easing of resource nationalism.
The deals were signed days before U.S. President Barack Obama’s trip to Moscow in early July, during which some U.S. companies, including ExxonMobil, called on Russia to clarify and ease caps on foreign investments in strategic sectors.
A source with a foreign energy lobby in Moscow said Trutnev’s remarks were a sign that restraints would ease further.
“There were a lot of surprises from Putin recently, now here comes Trutnev. Obama’s visit made a great difference,” he said.
Putin last year signed a law on strategic industries, one of his last decrees as president, clarifying what types of assets would be off-limits to foreigners — which included big oil and gas fields.
The global economic downturn since then has depressed demand and sent oil prices plummeting from record highs, cutting state budget revenues and pressuring some governments in mineral-rich countries to sweeten terms for foreign firms to help get projects developed.
Foreign direct investment into Russia fell 2.8 percent last year to $27 billion and is expected to shrink further this year.
ExxonMobil chief executive Rex Tillerson said last year that there was no trust in the county’s judicial system and that should be changed if the country wanted to attract major foreign investment.
Neil Duffin, head of Exxon’s project development unit, said this month that Russia’s subsoil law was the main obstacle for new deals in the country.
“Does the legislation take into account today’s reality? There are some doubts about that. I think there is a need to rethink it,” Trutnev said.
Analysts said foreign money was badly needed, especially to boost exploration, as underinvestment will lead to an oil supply crunch and a new spike in prices.
“There is a problem of underinvestment in the Russian oil industry. Investments will match last year’s level at best. … Only foreign participation will guarantee an acceleration in exploration,” said Valery Nesterov, an analyst at Troika Dialog.
A Message from The Moscow Times:
Dear readers,
We are facing unprecedented challenges. Russia's Prosecutor General's Office has designated The Moscow Times as an "undesirable" organization, criminalizing our work and putting our staff at risk of prosecution. This follows our earlier unjust labeling as a "foreign agent."
These actions are direct attempts to silence independent journalism in Russia. The authorities claim our work "discredits the decisions of the Russian leadership." We see things differently: we strive to provide accurate, unbiased reporting on Russia.
We, the journalists of The Moscow Times, refuse to be silenced. But to continue our work, we need your help.
Your support, no matter how small, makes a world of difference. If you can, please support us monthly starting from just $2. It's quick to set up, and every contribution makes a significant impact.
By supporting The Moscow Times, you're defending open, independent journalism in the face of repression. Thank you for standing with us.
Remind me later.