Energy Investments in the EU and
Russia: Investment Regulation under
the Third Energy Package and the
Russian Law on Foreign Investments
in Strategic Sectors
Sergey S. Seliverstov, PhD in Law
Advisor to the CLO, Electricity System Operator
Associate Professor, MGIMO-University
First Groningen-Moscow Conference on EU-Russian Energy Law, 30-31 May, 2013
Content of the Presentation
- Russian energy investments regulation
- Foreign investments in Russia (landmark events)
- EU energy investments regulation (Russian view)
- Russian investments in the EU (landmark events)
First Groningen-Moscow Conference on EU-Russian Energy Law, 30-31 May, 2013 2
Foreign Investments in Russia –
Law on Strategic Investments
Transactions resulting into establishment of control over the
strategic companies are subject to the prior approval of a
Government Commission.
The provisions of the Law apply to the companies doing
business inter alia in the following areas:
- subsoil use (including exploration) for subsoil parcels having
federal importance; service companies fall within the scope;
- natural monopolies, such as oil and gas transportation via
pipelines, electricity transmission (excl. distribution);
- electricity generation from nuclear power plants.
First Groningen-Moscow Conference on EU-Russian Energy Law, 30-31 May, 2013 3
Foreign Investments in Russia – Criteria
of Control over Strategic Companies
• holding more than 50 % (sometimes – less than 50 %; for
companies holding exploration and/or production license
for the subsoil parcel of federal importance – 25 %);
• being able to determine decisions;
• being able to appoint the executive body and/or more
than 50% of the members of the BoD (25% for the
companies holding subsoil license);
• being the corporate executive body.
First Groningen-Moscow Conference on EU-Russian Energy Law, 30-31 May, 2013 4
Foreign Investments in Russia – Criteria
of Federal Importance for Subsoil Parcel
• located on the land territory of Russia and having
extractable reserves of oil of more than 70 million tons or
having reserves of natural gas of more than 50 bn cubic
meters;
• located in the internal waters, territorial sea and
continental shelf of Russian Federation;
• the use of which is only possible by using the land plots of
the so-called “defence-purpose lands”.
First Groningen-Moscow Conference on EU-Russian Energy Law, 30-31 May, 2013 5
Foreign Investments in Russia –
Limitations for Use of Subsoil Parcels
on the Russian Continental Shelf
License to use the subsoil parcels of federal importance on
the continental shelf may only be granted to the Russian
legal entities:
• having at least 5 years experience of the Russian
continental shelf exploration/production
• with at least 50 % participation of the Russian Federation
De-facto it means that only Gazprom and Rosneft (and their
subsidiaries) may be granted licenses to use subsoil
parcels on the continental shelf.
First Groningen-Moscow Conference on EU-Russian Energy Law, 30-31 May, 2013 6
Foreign Investments in Russia –
landmark events (oil and gas)
- Decision not to ratify the ECT
- Shtokman field
- Cooperation agreements between Rosneft, Exxon and
Statoil
- Sale of TNK-BP to Rosneft
First Groningen-Moscow Conference on EU-Russian Energy Law, 30-31 May, 2013 7
Foreign Investments in Russia –
landmark events (electricity)
- E.On: owner of 82 % of OGK-5
- Enel: owner of 56% of OGK-4 and of 49% of
Rusenergosbyt
- Fortum: owner of 97% of TKG-10 and blocking
shareholding in TGK-1
- EdF: management company for Tomsk distribution comp.
First Groningen-Moscow Conference on EU-Russian Energy Law, 30-31 May, 2013 8
Russian Investments in the EU
Access to markets and ‘security of demand’
Ownership unbundling provisions
Certification of TSOs in electricity and gas sectors
Unclarity of PCI and TYNDP rules and procedures for third
countries’ promoters
First Groningen-Moscow Conference on EU-Russian Energy Law, 30-31 May, 2013 9
Russian Investments in the EU –
landmark events
-
North Stream (Project of European Interest 2006)
South Stream v. Nabucco
Russian decision not to ratify the ECT
ECJ case European Comission v. Repulic of Slovakia
Lietuvos dujos case
MOL resale made by Surgutneftegaz
3 TYNDP applications made by the Russian Electricity
System Operator
First Groningen-Moscow Conference on EU-Russian Energy Law, 30-31 May, 201310
Conclusions
1. No “open doors” for oil and gas investments: Russia is
protecting its subsoil resources whereas the EU is protecting
its internal market (customer base ).
2. Moderate limitations for investments in electricity sector.
3. Legal framework both in Russia and in the EU provides for
substantial degree of political discretion on the side of the
investments’ recipient.
4. All large investment projects in the energy sector on both
sides require political support. Energy investments should
be accompanied with various forms of energy diplomacy.
5. Possibility of having an investment treaty is an open
question.
First Groningen-Moscow Conference on EU-Russian Energy Law, 30-31 May, 201311