RUSSIAN FEDERATION: Federal Law No. 225 of 1995 on Production Sharing Agreements (2020 Ed.)

Meta Data
Title in national language: 
Федеральный закон от 30.12.1995 № 225-ФЗ "О соглашениях о разделе продукции" (в ред. от 08.12.2020)
Draft: 
No
Revision of previous policy?: 
No
Draft Year: 
1995
Effective Start Year: 
2020
Scope: 
National
Document Type: 
Law
Economic Sector: 
Energy
Energy Types: 
Coal, Oil, Gas
Issued by: 
Adopted by the State Duma - Lower House of the Federal Assembly, endorsed by the Federal Council - Upper House of the Federal Assembly
Source: 
Regulatory Database 'Garant' (RU)
World Trade Organisation (WTO)
File: 
Federal Law No. 225 of 1995 on Production Sharing Agreements (2020 Ed.) (RU)
Federal Law No. 225 of 1995 on Production Sharing Agreements (EN)
Overall Summary: 
The law establishes the legal basis for relationships arising with respect to Russian and foreign investment in exploration, development and production of mineral raw materials within the territory of the Russian Federation, as well as on the continental shelf and/or within the boundaries of the exclusive economic zone of the Russian Federation under the terms and conditions of production sharing agreements.
Environment
Energy environmental priorities: 
Article 7. Terms and Conditions for Conducting Operations..to take measures aimed at preventing harmful impact of the said operations upon the environment, as well as to remedy the consequences of such impact; to buy insurance against liability for damage caused in the event of accidents entailing harmful impact upon the environment; to remove all facilities, installations and other assets upon completion of the agreement operations as well as clean the territory on which the agreement operations were conducted.
Land use change for energy production purposes: 
Article 7. Terms and Conditions for Conducting Operations [...] 3. If works under an agreement are performed at sites located on territories of traditional habitation and economic activity of indigenous exiguous ethnic communities the Investor shall be obliged to implement measures prescribed by the legislation of the Russian Federation to protect the territories of traditional habitation(link is external) and economic activity(link is external) of indigenous exiguous ethnic communities and also ensure that relevant compensation is paid in cases and in the manner established by the Government of the Russian Federation.
Investment
Local content requirement: 
Article 7. Terms and Conditions for Conducting Operations...2. (...) the Agreement shall provide for the Investor's obligations for the following: (...) to grant Russian legal entities the priority right to take part in the conduct of the agreement operations as contractors, suppliers, carriers or in any other capacity under agreements (contracts) with Investors; to employ citizens of the Russian Federation, their portion being no less than 80 per cent of all employed personnel, to employ foreign workers and specialists only at initial stages of the agreement operations, or if there are no Russian workers and specialists with corresponding qualifications; to acquire production machinery, engineering equipment and materials of Russian origin in the amount of at least 70 per cent of the total cost of acquired production machinery, engineering equipment and materials in each calendar year(...) [A]t least 70 per cent of engineering equipment in value terms to be used for extraction of minerals, their carriage and processing (where it is provided for by the agreement), acquired and (or) used by an investor for carrying out works under the agreement, have to be of the Russian origin. This provision shall not extend to the use of trunk pipeline objects whose construction and acquisition is not provided for by the agreement. The parties shall provide a clause in the contract to the effect that at least a specified part of mineral recovery and processing technological equipment (if any if mentioned in the contract) purchased by the investor shall be manufactured on the territory of the Russian Federation.
Investment climate development: 
Article 2. Production Sharing Agreement 1. A production sharing agreement (hereinafter referred to as an Agreement) shall be an agreement under which the Russian Federation shall grant the participant of business activities (hereinafter referred to as the Investor) an exclusive right for exploration, development and production of mineral raw materials on the subsoil area provided for in the Agreement and conducting operations related thereto on a chargeable basis and for a certain period, while the Investor shall undertake to perform the said operations at his own expense and at his own risk. ---Article 8. Production Sharing (...) 1. Products made shall be shared by the State and the investor in compliance with an agreement. ---Article 9. Investor's Title to Produced Production (...) 1. The part of a product produced considered under the contract to be the investor's share shall be owned by the investor. ---Article 18. State Guarantees of the Investor's Rights 1. The Investor shall be guaranteed protection of property and other rights acquired and exercised by him under the Agreement. (...) 2. The statutory acts of federal executive government bodies as well as laws and other statutory acts of the Russian Federation subdivisions and statutory acts of self-government bodies shall not apply to the Investor if the said acts impose restrictions on the Investor's rights acquired and exercised by him under the Agreement with the exception of the instructions by supervisiory government bodies issued in compliance with the Russian Federation Law for the purposes of ensuring operational safety, protection of subsoil, environment and health of the population, as well as for the purposes of ensuring social and State security.
Governance
Statistics collection and management: 
Article 11. Title to Assets and Information (...) 2. All raw geological, geophysical, geochemical and other data, data on its interpretation and derived data as well as rock samples, including core and reservoir fluids obtained by the Investor as a result of Agreement Operations shall be the property of the State as a matter of property right.