A Federation Council decision to put off debate on key production-sharing legislation until October will slow the progress of oil and gas investment deals worth billions of dollars and could create a slick political football, oil executives and analysts said Monday.


The upper house of parliament Friday delayed consideration of the law until after the recess, leaving foreign companies waiting for the bill's legal and tax guarantees to make it onto the books.


"A major investor is going to look at this and want a determination before he puts his money in," said one senior executive, who asked not to be named.


The postponement, however, does leave legislators time to clear up a host of loose ends needed to implement the law fully. Normative acts governing items such as accounting, standard contracts and special taxation procedures, as well as amendments to existing oil and gas legislation, still must be passed, analysts and executives said.


The production-sharing law, which the State Duma passed June 14 after more than a year of scrutiny inside and outside the chamber, provides tax and legal guarantees for investors who share mineral resource production and its profits with the state.


Final approval is considered essential for projects such as the $15 billion Exxon-led Sakhalin-1 development in the Far East and the Timan-Pechora exploration in the Far North to go ahead.


But with elections to the Duma scheduled for Dec. 17 and the Federation Council's status as an elected or appointed body yet to be decided, analysts said politics and regional issues this fall could complicate final passage of the law, which also must be signed by President Boris Yeltsin.


"We cannot pass this law in its current form because it gives the parliament no chance to control decisions by the government that involve amounts of money that are far greater than the country's annual budget," said Yury Boldyrev, a member of the reformist Yabloko faction in the upper house. "The government will be able to determine its foreign partners at will and cut deals with them that will run counter to the interests of domestic producers and no one will be able annul those deals."


Rubvalter Dmitry, who follows the energy sector for the Presidential Analytical Administration, said the government likely would be able to overcome such objections, but acknowledged that "elections could influence the situation."


Pavel Pavlov of the President's State Legal Board, an advisory body, also said the production-sharing law probably would be passed, but acknowledged the claims of many government officials and investors that the measure contradicts some existing oil and gas legislation.


"The contradictions come up because these oil and gas laws are not going through parliament as a coordinated package," Pavlov said "But it's better than nothing," he added.





-- Leonid Bershidsky and Michael Gulyayev contributed to this report.