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    Sakhalin-III auction to be held after law on strategic companies

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    A tender to prospect the Sakhalin-III oil and gas project in the Far East will be held after bills on foreigners' participation in strategic enterprises are approved, the natural resources ministry said Thursday.

    MOSCOW, February 15 (RIA Novosti) - A tender to prospect the Sakhalin-III oil and gas project in the Far East will be held after bills on foreigners' participation in strategic enterprises are approved, the natural resources ministry said Thursday.

    Deputy Natural Resources Minister Alexei Varlamov made this statement at a working meeting with Exxon Mobil Russia Inc. President Ben Haynes February 15.

    Varlamov said the ministry intends to hold the auction until the end of 2007, but only after the bill on mineral resource extraction limiting foreign investors' access to strategic deposits is amended.

    "The relevant bill prohibits foreign investors' control of projects to develop shelf-based deposits," the ministry's press office said.

    The bill sets out the criteria and procedure for classing deposits as strategic or federal. These will include oil deposits with reserves above 70 million metric tons (513.1 million bbl), natural gas deposits holding over 50 billion cubic meters, gold deposits with reserves of more than 50 metric tons, copper deposits with reserves of over 500,000 metric tons, and all continental shelf deposits.

    However, not all deposits meeting the criteria will necessarily be classed as strategic, a government source earlier said, adding that the list of federal deposits needs government approval.

    The field in the Sea of Okhotsk holds over 800 million metric tons (5.86 billion bbl) of oil and more than 900 billion cubic meters of gas in estimated reserves.

    The state-controlled oil company Rosneft holds a license to develop the Venin block off Sakhalin Island. It holds a 49.8% in the block's operator, Venineft. The region's Sakhalin Oil Company and China's Sinopec each own the remaining 25.1%.

    U.S. companies Mobil, Texaco and Exxon won a tender for licenses on the three remaining blocks of the field in 1993 under a production-sharing agreement (PSA), but the Russian government annulled the results of the tender in 2004, citing changes in tax laws on PSAs.

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