The law, which has been a priority for the government and foreign oil companies for years, provides tax and other guarantees previously lacking in one of the world's riskiest investment climates.
Deputies, after rejecting amendments Friday, passed the law overwhelmingly on a third and final reading after pushing it through a second reading with little debate.
Only the Communist and Agrarian factions, some of whom have voiced concern about foreigners "plundering" Russia's resources, voted against it.
"This is the first law in our history that creates the legal basis for attracting foreign investment to the most effective sector of Russian industry," said Grigory Yavlinsky, leader of the liberal Yabloko faction.
"Now we can talk about possible participation by foreign investors in such projects as Sakhalin-1, Sakhalin-2 and development of the Priobskoye deposit," he said.
Yavlinsky was referring to projects that have been on hold around the Far Eastern island of Sakhalin, involving such giant firms as Royal Dutch/Shell, Exxon and Mobil.
Amoco is negotiating to develop the Priobskoye field in western Siberia and is part of an international consortium seeking to tap the resources of the Far North Timan-Pechora basin.
The production-sharing law, which could lure more than $50 billion from the various long-term projects, will provide a more stable investment regime and simplify tax obligations.
The Russian economy will benefit from royalties, a share in profits, and thousands of jobs in impoverished far-flung regions. Foreign partners will be exempt from most taxes.
The law still has to be approved by the Federation Council upper chamber and be signed by President Boris Yeltsin.
But Alexei Melnikov, one of the authors of the bill, said he expected it to pass without difficulty.
Many of the provisions of the law are contained in a presidential decree signed in December, 1992, which has served as a basis for negotiations until now.
Russia's Fuel and Energy Ministry has been pushing for the law, which is just as important for cash-strapped Russian companies as for foreign partners. Last week, the Union of Oil and Gas Industrialists, a powerful lobby group, appealed to parliament to adopt the legislation quickly.
Production-sharing deals could help to reverse years of declining output in the oil industry due largely to lack of investment. Oil and gas account for about half of Russia's foreign exchange earnings.
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