RUSSIA CLAMPS DOWN ON DATA RELEASE

Russia is stepping up enforcement of laws banning unauthorized release of detailed geological and geophysical data to foreign companies.

But companies authorized to sell or license information about Russian minerals say the stricter oversight isn't affecting their activities. That's because the effort is intended to curb illegal sales of data by Russian regional organizations and federal agencies.

Measures taken by Russia's State Committee of Geology and Use of Mineral Reserves (Rosgeolcom) include:

Instructing customs department officials to treat as contraband any data about Russian mineral resources being exported without proper permits.
Forming a special department to review data and award licenses for sales of data outside Russia.
Creating the Rosvneshgeo venture to regulate exports of geological information.

In addition, Russia's state tax department and ministries of finance and justice are considering sanctions to be imposed for violations of lawful procedures.

The added vigilance by Russian officials likely will help clear up confusion among foreign companies, resulting from vague laws and regulations, about how and from whom data may be obtained legally.

Grant Lichtman, vice-president of Jebco Seismic Inc., Houston, said requirements covering dissemination of Russian mineral information were issued more than a year ago. But because social and political turmoil made it relatively easy to circumvent the rules, they were being ignored by Russian and foreign companies alike.

QUALIFIED SELLERS

Jebco is one of four companies licensed to sell detailed Russian mineral data. Jebco Seismic Ltd., London, in April 1989 signed a contract covering sales, licensing, and reprocessing of proprietary geological and geophysical data held by the old Soviet Ministry of Geology (OGJ, May 1, 1989, p. 36). The license through which Jebco sells seismic data is held by Rosvneshgeo, Jebco's joint venture partner.

Other companies authorized to license and sell detailed Russian geological and geophysical data include:

Wavetech Geophysical Inc., Denver. Wavetech sells data for competitive bidding tenders under agreements with dozens of local production associations, all approved by Rosgeolcom.
MD Seis, a 50-50 venture of MD Seis U.S.A. LC, Houston, and the Russian Ministry of Fuel and Energy. The U.S.-Russian venture acquires data in cooperation with Russian production associations, which then own the data jointly with MD Seis.
Halliburton Geophysical Services Inc. (HGS), Houston, is marketing a geological report released this month on the Eastern Siberian Sea and 1,544 line km of 120 channel marine seismic data collected in the region under an agreement with Dalmornefetegeofizika Trust (DNG) in first quarter 1991. HGS also is continuing to market marine seismic data acquired with DNG since 1990 in the Chukchi Sea. A geological report for the Chukchi Sea is in preparation.

ORIGINS OF THE RULES

Edward Engel, first deputy chairman of Rosgeolcom, and Igor Fedorov, Rosgeolcom chief of foreign economic relations, trace development of existing rules governing sales of Russian geological and geophysical data to a decree issued in June 1991. That decree was similar to rules already in place allowing foreign companies to buy Russia mineral information from authorized sellers.

Current requirements were set by Russia's new mineral law effective in February 1992 and implementing regulations effective last July. Those measures put Rosgeolcom and affiliated regional agencies in charge of developing Russian minerals. They specified that awards of exploration and development acreage must occur within the context of international competitive bidding rounds.

Rosgeolcom and officials of the Russian Federation's constituent republics, krays, oblasts, and local autonomous groups must jointly approve proposed competitive tenders and exploration and development licenses issued to winning bidders.

Rosgeolcom Chairman Victor P. Orlov in a July 21 letter clarified that detailed information on Russian underground resources may be sold to foreign companies only within the framework of competitive tenders. Orlov's letter also said export sales of general regional information on Russian minerals are allowed as part of agreements involving scientific or technical collaboration and exchanges-but only with Rosgeolcom consent.

DECREE 540

Because many Russian enterprises-private companies, cooperatives, and organizations in federal ministries-had been selling geological and geophysical information in breach of the provisions clarified in Orlov's letter, the Russian government issued Decree 540 Aug. 3 over the signature of Russian Prime Minister Yegor Gaidar.

Engel and Fedorov said Decree 540 emphasized that attracting foreign investment in oil and gas exploration and development is the main goal of exporting Russian geological and geophysical information. The decree also reiterated that sales of detailed geological information on Russian minerals are allowed only within the context of competitive tenders for rights to explore for and develop mineral deposits.

"Rosgeolcom will look at each request and decide if release of data is appropriate in consideration of the interests of Russia," Engel and Fedorov said. "Rosgeolcom will stop working with companies that have been or will be exclusively obtaining information from partners without authorization from the committee."

LICENSE TO SELL

Any organization must be licensed to sell geological data, regardless of whether state or private funds were spent to gather the information.

As specified by Decree 540, Russian law allows detailed seismic data collected by Russian enterprises using state funds to be sold to foreign companies only through authorization of Rosgeolcom.

Similarly, geophysical information collected by Russian joint ventures with foreign partners may be released only through licenses obtained by Russian partners.

A foreign company is required to obtain one license from Rosgeolcom to use private funds to collect exploratory geological or geophysical data on Russian territory and a second license to sell or transfer the information.

Data obtained by foreign companies-either from a Russian partner during joint preparation of a feasibility study or other types of joint activity are confidential and may not be sold or transferred to other companies or individuals.

Engel and Fedorov said non-Russian companies that in the past bought data sold without authorization might have to pay for it again.

"That is not the objective of the committee," they said. "But we are not responsible of oil companies have ignored the laws in the past."

DEALING WITH VIOLATORS

Each non-Russian company that has obtained Russian mineral data not authorized for release must decide for itself what to do with the information.

Rosgeolcom will neither impose penalties on foreign companies that have improperly acquired data nor require return of the information.

"They are not out to sanction companies for buying information in good faith," Lichtman said. "But on the other hand, Rosgeolcom won't be responsible if somebody who bought data improperly and wants to join a licensing round has to pay for the data again."

Engel and Fedorov said Rosgeolcom expects foreign companies to work within the legal framework and will take a dim view of companies that intentionally break the rules.

Russian companies that continue selling data without Rosgeolcom's permission will be penalized.

"According to Decree 540, if a Russian organization sells data without authorization, it will forfeit revenue from the sales to the government," Engel and Fedorov said.

To confirm that Russian organizations offering to sell data have Rosgeolcom's authorization, they suggested companies buying data ask to see licenses authorizing the sales. The licenses should be signed by Rosgeolcom Chairman Orlov or a deputy chairman.

"This is the easiest, most direct way for an oil company to learn whether the data are authorized for sale," they said.

Prospective data buyers can confirm whether Russian organizations offering to sell data are properly licensed by contacting Russia's Department of Foreign Economic Relations or a Rosgeolcom deputy chairman.

CONTRACTORS' PERSPECTIVES

Jebco's Lichtman said Decree 540 is intended to restore balance to the availability of information about Russian mineral resources.

"When the Russian government is organizing a licensing round, it should have at least as much access to information as foreign companies competing in the round," he said. "Decree 540 was issued because Rosgeolcom did not have access to the same information foreigners had."

Ed Gendelman, president of Wavetech, said Decree 540 should make Russian data sales more systematic.

"Rosgeolcom decided not to allow release of detailed data on areas not open to western companies because it isn't necessary," Gendelman said.

Before Rosgeolcom began exerting more authority over data sales and exports, "information was leaving the country in suitcases, and there were all kinds of strange things going on," he said.

Because all projects for which Wavetech has been selling data have been properly approved by Russian authorities, Decree 540 doesn't affect the company's data sales.

Wavetech is selling data packages covering five producing and two nonproducing fields on four blocks in western Turkmenistan with combined reserves estimated at 1.2 billion bbl of oil and 7.6 tcf of gas. Bids on the acreage are be submitted by Dec. 20 to Turkmenistan's consulate in Moscow. Offers are to be opened Dec. 22 in Ashgabat, Turkmenistan.

Wavetech also is handling data for a competitive offering of 70,000 sq km in Tomsk Oblast of western Siberia. Deadline for bids is Feb. 8.

The acreage, divided into 20 bidding blocks ranging in size from 2,000 to 6,000 sq km, is underlain by intensely fractured, brecciated, and karsted Paleozoic carbonate reservoirs often more than 200 m thick. Known fields on bidding acreage commonly exhibit oil columns more than 200 m thick. Wells reportedly sustain untreated flow rates of as much as 3,000 b/d.

Wavetech in 1993 expects to handle data for two more competitive bidding rounds in Turkmenistan and possibly three more in Russia.

EXPANDING ACTIVITIES

Kindel McNeill, vice-president of MD Seis U.S.A., said in addition to current activities, the MD Seis joint venture expects during first quarter 1993 to get involved in competitive tenders.

"When fields are nominated or put into bidding and licensing rounds, our company will accumulate the data and assemble it into packages that will be offered to companies interested in bidding," he said.

McNeill said MD Seis and Jebco have more experience selling detailed data and generating interest in projects in Russia and other C.I.S. republics than anyone else. The companies also sell regional data not restricted by Decree 540.

When formed in November 1989, MD Seis was a joint venture of Professional Geophysics Inc. (PGI) and the old Soviet Ministry of Oil and Gas. When the Soviet Union fell apart, the venture was recast with Russia's fuel and energy ministry. Recently, PGI was passed to new owners and renamed MD Seis U.S.A.

"In fact, we have been imbedded down into the local production associations," McNeill reported. "We're viewed now as an indigenous company. There is shareholding in Russia in our company."

MD Seis has collected 3,000-4,000 line km of speculative data in areas not yet offered in competitive tenders and, under contracts with western companies, more than an additional 10,000 line km of seismic data.

The joint venture has eight seismic crews operating in western Siberia. Data are being collected in Langepass and Kogalym, both in Tyumen Oblast. MD Seis also is acquiring data in the Russian okrug of Bashira and in Azerbaijan.

HGS, in addition to work in the East Siberian and Chukchi seas with DNG, is continuing cooperation begun in late 1990 with SGE Khanty-Mansiyskgeofizika and SGE Yamalgeofizika to market seismic data packages covering fields in western Siberia.

HGS and associates are preparing data packages for proposed first quarter 1993 tender rounds in the Tyumen region of western Siberia and in Kazakhstan.