Russia to Double Mineral Exploration Spending to 2020

MOSCOW, March 27, 2008 (Dow Jones Newswires)

Russia will double state spending on resource exploration to 2020 to $23 billion, in a move to boost the country's stagnating oil production, Natrual Resources Minister Yuri Trutnev said Thursday.

The proposal, which has been approved by the cabinet, allows Russia to speed up exploration from next year, instead of 2010.

"We believe that if we wait for one more year it will not improve the situation with mineral resources in Russia," the minister said.

Russia has seen a decline in crude oil output in the first two months of this year. Credit Suisse investment bank said Thursday it forecasts an annual decline in Russian crude production this year, a decline that would end a 10-year, 58% surge in production.

"This is good news not only for Russia, but for international markets aswell," said Valery Nesterov, an analyst at Troika Dialog, a Moscow-based investment bank.

"Despite the current problems building up in the oil sector, the increased spending means that production will develop naturally, allowing Russia's to fulfill its obligations to global markets," Nesterov added.

Half the money, $11.5 billion, will be spent on oil and gas exploration with oil-rich East Siberia getting $5.5 billion.

The proposal sees private companies spending 8 to 12 rubles for every one ruble the state spends.

Last year the Russian state spent $850 million, or 0.5% of budget spending, on exploration, compared with 2% to 5% in other countries, the minister said.

MOSCOW, March 27, 2008 (Dow Jones Newswires)