The Energy Regulation and Markets Review - Stikeman Elliott

Russia
sources and radioactive substances are owned by Russia and, in particular cases and
within certain limits, by Russian legal entities. 36
In the gas power industry, Russia must hold at least 50 per cent plus one of
the total ordinary shares possessed by Russia and by joint-stock companies in which
Russia has a more than 50 per cent stake in the organisation that owns the Unified Gas
Supply Network (Open Joint-Stock Company Gazprom). It is prohibited to divide up
the Unified Gas Supply Network. Ordinary shares in the owners of each regional gas
supply and gas distribution network that may belong to foreign organisations are limited
to a maximum of 20 per cent. 37
As previously mentioned, the owner of the Unified Gas Supply Network or the
100 per cent owned subsidiary of this owner (Open Joint-Stock Company Gazprom
Export) has the exclusive right to export gas. 38
iv Transfers of control and assignments
Organisations rendering the following services are natural monopoly entities: electric
power transmission, operational dispatch management in the electric power sector, gas
transportation by gas pipeline, and oil and petroleum product transportation by major
pipeline. Such organisations and those dealing with energy resources contained in the
subsoil (geological study, exploration and extraction of minerals on subsoil sectors of
federal significance) are classed as being of strategic significance for the country’s defence
and security. 39 Consequently, restrictions have been imposed on foreign investors and
groups of entities, including a foreign investor participating in the authorised capitals of
such organisations and concluding transactions entailing control over them.
Foreign states, international organisations, and foreign and Russian organisations
under their control do not generally have the right to establish direct or indirect control
over Russian strategic organisations. Transactions concluded thereby to acquire the rights
to dispose of over 25 per cent of the votes in Russian strategic organisations (more than 5
per cent of the votes if subsoil sectors of federal significance are used) are subject to prior
agreement with the Russian state.
Other foreign investors (including foreign and Russian organisations under their
control) may, in principle, establish direct or indirect control over Russian strategic
organisations but must obtain prior approval for acquiring the rights to determine
decisions made by such organisations and to dispose, directly or indirectly, of more than
50 per cent of the votes in such an organisation (25 per cent or more of the votes if
subsoil sectors of federal significance are used). 40
36 Article 5 of the Federal Law on Use of Nuclear Power.
37 Articles 15, 14 and 7 of the Federal Law on Gas Supply in the Russian Federation.
38 Article 3 of the Federal Law on Gas Exports.
39 Article 3, Part 1 Clause 2 and Article 6, Clauses 36 and 39, of the Federal Law on Foreign
Investment in Companies of Strategic Importance for National Defence and Security.
40 Article 2, Part 3 and Article 3 Part 1 Clause 3 of the Federal Law on Foreign Investment in
Companies of Strategic Importance for National Defence and Security.
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