Gref's share

His department will oversee the PSA

German Gref put the finishing touches on Mikhail Kasyanov. Yesterday, the Prime Minister signed a regulation on the delimitation of powers of federal executive authorities in the field of preparation, conclusion and implementation of the PSA. In accordance with this document, Mr. Gref’s department becomes the main one for the division of products. It is the Ministry of Economic Development and Trade (MEDT) that will now recommend which deposits to develop on production sharing terms, prepare the conditions for holding tenders for the conclusion of a PSA or conclude that a tender for a specific subsoil plot may not be held at all, organize an examination of feasibility studies for projects, prepare agreements on distribution of the state share of production, etc. True, the main functions, such as concluding, amending and terminating the PSA, determining the procedure for using the state share, appointing representatives on management committees, remain with the government itself. But the ministry of German Gref will prepare all these issues. And, as you know, whoever cooks removes the foam.

Other departments, in particular the Ministry of Energy, will also continue to deal with PSA. But for those who are fluent in the difficult language of bureaucratic papers, it is absolutely clear from the situation that this department, like others, will be in second or third roles.

There is nothing unexpected in the fact that Mr. Gref became the chief curator of the PSA. On the contrary, the wait was prolonged. After Vladimir Putin’s summer visit to Sakhalin and his fiery speech about the importance of the PSA for the Russian economy, talk began that it was the main reformer of Kasyanov’s cabinet, German Gref, who is responsible for almost everything significant and important, who should share the products. But although the government’s preliminary decision was made at the end of August, the ministry had to wait almost six months for final approval. And, as White House sources assure, the provision would not have been signed to this day if not for a direct order from the president. The Prime Minister was made to understand that such a promising direction from an investment point of view cannot remain unattended for much longer. Since the choice had to be between the Ministry of Economic Development and Trade and the Ministry of Energy (this department had also been fighting for control over the PSA for months), Mr. Kasyanov, faced with the need to choose, chose the lesser, in his opinion, of two evils. He can take comfort in the fact that after a quick reorganization of the government, everything can be replayed.

Mr. Gref, as informed sources in the Ministry of Economic Development and Trade assure, came up with what to do with this new direction a long time ago. He wants to implement a scheme in which agreements on behalf of the state will be prepared by a state-owned company, of course under the strict control of the Ministry of Economic Development and Trade. Such a company is called Rosneft. Mr. Gref's motivation is simple: Rosneft specialists are more professional than ministerial officials, and the agreements prepared by the company will be of better quality. In those projects where Rosneft itself will act as a participant, the government’s counterparty will be Zarubezhneft. According to Mr. Gref’s scheme, the company, like the state, will sign the PSA concluded.

Since the PSA law stipulates that the agreement is signed by the government and the executive body of the region in which the subsoil plot is located, an attempt to introduce such an innovation will certainly cause resistance in the Duma. It is possible that the discontent of some deputies will be organized by oil companies, which are unlikely to like Rosneft’s exclusive rights.

However, given how long everything in Russia has been harnessed, one can assume that Mr. Gref’s plans are not destined to come true - his innovations will get bogged down in interdepartmental squabbles. And therefore, for investors who have long dreamed of unity of command reigning in the affairs of the PSA (foreign companies especially dream), it is too early to rejoice at Mr. Kasyanov’s resolution. Regardless of what German Gref is actually planning.

Natalya OLENICH