Russia's Oil Extraction Increase Russian Budget 34bn

Russia?s Natural Resources Ministry announced on Thursday that the state budget 2005 has raised about 34 billion rubles ($1.3 billion) from auctions which sell licenses to use Russia's subsoil resources (mainly oil), new agency RIA Novosti reported.

The announcement was made at a meeting between Minister Yuri Trutnev and director of ministry?s economic and finance department Sergei Donskoy. Donskoy said that the government agency has already surpassed planned figures for this year by 7 billion rubles ($242 million).

Trutnev praised the results, attributing them to a new mechanism of granting rights for the use of subsoil resources that stipulates auctions instead of tenders.

MosNews has reported in the beginning of 2005 that Trutnev?s agency decided to change the practice of granting extraction licenses, so as to make sure that the deposits are really being developed by auction winners. In particular Natural Resource Ministry announced that Russian companies must abandon offshore practices in order to be allowed to take part in license auctions and to develop the country?s natural resource deposits.