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Legal aspects of ensuring national security in the sphere of subsoil use of natural gas in Russia and China

Gao Yui

Postgraduate student, Department of Commercial Law, St. Petersburg State University

199034, Russia, gorod Sankt-Peterburg, g. Saint Petersburg, ul. Universitetskaya Naberezhnaya, D., 7-9

gaoyu321324@gmail.com
Другие публикации этого автора
 

 
Bolotov Maksim Viktorovich

Postgraduate student, the department of Commercial Law, Saint Petersburg State University

St. Petersburg, Universitetskaya embankment, 7–9

bolotov6594@gmail.com

DOI:

10.25136/2409-7136.2022.2.37382

Review date:

23-01-2022


Publish date:

04-02-2022


Abstract: In the current context, the goals of Russia and China in achieving "carbon neutrality" by 2060 and strengthening their own energy resource and environmental security, the comparative study of the laws on transition towards low-carbon energy sources and new environmental standards declared by both countries is relevant and urgent. The subject of this research is measures to reform legislation in the sphere of exploration and extraction of natural gas in Russia and China, which can be divided into the following aspects: reform of the legislative system on the mineral resources and competitive transfer of the right to use the subsoil plots, reform of the law "On Foreign Investment" and definition of state strategic mineral resources, legal system of environmental protection, and reform regarding the protection of environmental resources in the mining districts. Based on comparative research in various legal disciplines, the author generalizes and analyzes the similarities and differences in ensuring resource and environmental security in Russia and China. This article summarizes the experience and shortcomings of Russia and China in maintaining balance between the national resource security and environmental security aimed at the achievement of "carbon neutrality". Stemming from the fact that both countries manage the appropriate resource and environmental security, China should adopt the Russian experience and transform the administrative provisions of the lower level associated with the protection of resources and environmental security into legislative acts, in order to enhance their law enforcement, compulsory and deterrent authority. Russia, in turn, should also resort to the experience of China in implementation of the factors of market competition in the sphere of exploration of oil and gas, as well as encourage and motivate foreign or domestic private capital to contribute to oil and gas exploration and help Russia to upgrade its equipment and boost production.


Keywords: foreign investment, subsoil, environmental safety, resource security, national security, use of subsoil plots, сhinese legal reform, environmental protection, subsoil of federal significance, carbon neutrality
This article is automatically translated. You can find full text of article in Russian here.

The International Energy Agency (hereinafter referred to as the IEA), established in 1974, defines the basis of national energy security as the stability of crude oil supplies and prices [1, p.1439]. But, with the entry into force of the 2016 Paris Agreement, in September 2020, China announced a goal to reach a peak in carbon dioxide emissions by 2030 and carbon neutrality by 2060.. In October 2021, Vladimir Putin announced that Russia plans to achieve carbon neutrality by 2060.. At the moment, China and Russia have begun the transition to low-carbon energy sources. O.A. Gorodov notes that natural gas as an energy source is the most environmentally friendly product, also has the economic advantages of reliable supply, affordable prices and sustainable development[2, p.29]. Therefore, natural gas is recognized as an important tool for the transformation of the energy industry and a "transition bridge" to zero-carbon energy[3, p.173].

Due to the worsening relations and unstable geopolitics of China, for example, trade disputes between China and the United States, general concepts of national security, such as resource security and environmental security related to natural gas supplies, have begun to come to the attention of Chinese scientists dealing with national security issues.

When searching in the CNKI electronic library on the topic "natural gas", "natural gas production", "safety", twelve main research topics can be identified that contain the largest number of works: natural gas hydrate, natural gas, shale gas, Russia, energy cooperation, coal seam gas, energy security, mineral resources, oil and gas resource, natural gas production, oil and gas, shale gas development.

By further analyzing the above research topics, two main categories of researchers can be distinguished.

The first category is researchers who expand the field of research from a single law on natural gas supplies to related legal disciplines for conducting complex and interdisciplinary research. This article belongs to this category. The second category is scientists, for example, geologists and environmentalists, who use their professional knowledge and skills to develop national rules for environmental protection in the energy industry, new legal norms.

Since 2017, the Chinese government has begun a comprehensive reform of the oil and gas system. According to the document "Several opinions on deepening the reform of the oil and gas system", developed by the CPC Central Committee and the State Council, the main areas of reform can be identified: reflecting the properties of energy products, ensuring stable and reliable oil and gas supplies, ensuring national energy security, reducing the role of the state in energy regulation, as well as creating a competitive exploration market, mining and processing of minerals[4, p.173].

To discuss the above-mentioned reforms in the field of natural gas exploration and production over the past five years, the structure of this article is divided into four parts. First, the prerequisites and the need for legal and political reforms carried out by China and Russia are considered in order to ensure the security of national natural gas resources and environmental safety.

To analyze the possibility of achieving the above goals, the reforms of the following legal systems and key provisions of the legislation of Russia and China are compared and discussed. Firstly, the reform of the subsoil legislation system and the competitive system for the transfer of oil and gas production rights. Secondly, the reform of the law "On Foreign Investments" and the definition of state strategic mineral resources. Thirdly, the legal system of environmental protection and the reform of the protection of environmental resources in mining areas.

It should be noted that in January 2022 in Kazakhstan, the increase in natural gas prices caused a chain of nationwide protests. This incident prompted Chinese scientists to start research on the complex and correlative analysis of economic security, social security and political security in connection with the consumption of natural gas.

Prerequisites and the need for reform.

In the legislation of most countries there is no precise and specific definition of the term national security. The definition of national security varies from country to country. Russia and Australia are focused on maintaining their own energy and resource security, China and the United States emphasize political, military and technological security [5, p.83]. The concept of national security in a narrow sense is scattered across the legal sector related to national security, and its concept has great flexibility (elasticity) and wide applicability. The Russian scientist will also note that "various interpretations of the concept of "energy security" at different times are presented in Russian legislative documents of various levels"[6, p.183].

The decree "On the National Security Strategy of the Russian Federation" provides the following legislative definition of the national security of the Russian Federation: "the state of protection of the national interests of the Russian Federation from external and internal threats, which ensures the implementation of constitutional rights and freedoms of citizens, decent quality and standard of living, civil peace and harmony in the country, protection of the sovereignty of the Russian Federation, its independence and state integrity, socio-economic development of the country".

In 2014, the Chinese government put forward the "general concept of national security", which for the first time raised resource and environmental security to the same strategic level of national security as political and military security, and included them in the national security management system. Russian scientist V.V. Romanova believes that the most important component of national security is energy security[7, p.10].

In the field of natural gas supply security, on the one hand, the Chinese government has implemented reforms in the field of natural gas exploration and production (especially shale gas) to increase production. For example, in 2021, the Chinese government called on all types of capital to invest in the field of oil and gas exploration, and introduced a mechanism for exiting the oil and gas block for state-owned companies that unreasonably occupy oil and gas fields. In Xinjiang, 18 competitive procedures for the transfer of oil and gas exploration rights were completed[8, P.31]. On the other hand, the import of natural gas by pipeline and liquefied natural gas (hereinafter referred to as LNG) transported by sea is regulated in accordance with the goal of achieving "carbon neutrality".

As for the import of natural gas, in May 2014 Gazprom PJSC and the China National Oil and Gas Corporation (hereinafter – CNPC) signed a contract for the purchase and sale of Russian gas through the Power of Siberia gas pipeline. The contract is concluded for a period of 30 years and involves the delivery of China 38 billion cubic meters. m of gas per year.

For the import of LNG transported by sea, Chinese investors controlling about 30 percent of the Yamal LNG integrative project in 2014 became the largest co-owners of this project. CNPC and the China National Oil Company (hereinafter – CNPC) acquired 20 percent of participation in the Arctic LNG-2 projects in 2019.. In addition, on 10/20/2020, Total delivered the first batch of carbon-neutral CNG CNG.

It is worth noting that Russia is increasing oil and gas production and their export to the world market, including the Chinese market from year to year [9, p.43]. In order to reduce the dependence of the Russian budget on fluctuations in world oil prices and increase the volume of production of environmentally friendly petroleum products, the Russian government is conducting a "tax maneuver", according to which the export customs duty is reset and the mineral extraction tax rate (hereinafter – MET) is increased for oil and gas production from 01.01.2019.

The above indicates that the Chinese government has especially strengthened its cooperation relations with Russia in the field of natural gas supplies.

1. Reform of the system of the law "On Subsoil" and the competitive transfer of the right to use subsoil plots for oil and gas production.

1.1 Reform of the system of the law "On Subsoil".

To create a legal framework in China, it is necessary to go through two stages. First, a national or administrative policy is formulated (low level of legal regulation) for pilot testing of the reform, and then, based on the results of the first stage, the issue of the need for legislative regulation is resolved (high level). This is a unique legislative practice for China.

Similar legislative practice can be observed in the regulatory acts of China and Russia, in particular in the field of management of the rights of use of subsurface areas. But some Russian scientists emphasize that due to the fact that the legislation in the field of subsoil use is not codified and is mainly a set of subordinate regulations: orders of the Ministry of Nature of the Russian Federation, methodological guidelines, regulations, etc., many questions and conflicts often arise in the practice of applying legislation on subsoil use[10, p.26].

The current law "On Subsoil" of 1986 is a product of the era of planned economy. Although this law was revised in 1996 and 2009, its basic design and regulatory directions obviously cannot meet the current needs of China in protecting state security and environmental safety in the field of subsoil use.

Since 2017, official documents often write about the need to accelerate the revision of the law "On Subsoil", giving strategic value to minerals and protecting important minerals [11, P.150]. Thus, in 2019, the law "On Subsoil" began to be developed (the draft of the new version of the law - 2019).

In comparison with the previous law "On Subsoil" (1986), the law "On Subsoil" (draft of the new version of the law - 2019) combines the attributes of three legal areas: civil law, economic (resource) law and administrative law, and there have also been major changes in the structure of the law [12, P.10].

The main changes can be identified: chapter No. 2 "Registration of mineral exploration and mining permit" was changed to "Protection, exploration and extraction of minerals", Chapter No. 3 "Exploration of minerals" was changed to "Rights to exploration and extraction of minerals", chapter No. 4 "Mining" changed "Ecological restoration of mining areas", Chapter No. 5 "Collective mining enterprises and individual mining enterprises" changed to "Supervision and management".

Comparing the main changes in the structure of the old and new laws "On subsoil", it can be seen that the law "On Subsoil" (2019) is adapted to the current needs of protecting the country's mineral resources and the environment in the mining areas. However, it is worth noting that the law "On Subsoil" of 2019 still has drawbacks: the dual role of the Chinese government as participants in the resource extraction market and the regulator has not changed.

When the Government acts as the assignor of mining rights, it forms an equal civil relationship with the assignee, mainly to obtain the greatest economic benefit. Acting as an administrative regulator, it forms administrative relations with the legal successor, at the same time, it needs to bear administrative responsibility for compliance with social, public and environmental interests.

To some extent, economic interests and environmental interests are a couple of contradictions, and it is difficult to find a balance between them. In practice, the government usually pursues economic and political benefits, but neglects to fulfill the state duty to preserve ecology and the environment[13, P.472].

1.2 Reform of competitive procedures for the transfer of the right to use the subsoil for oil and gas production.

The market reform of the transfer of oil and natural gas production rights was accompanied by a market reform of the entire system of transfer of mining rights in China. Since the founding of the People's Republic of China (hereinafter referred to as the PRC) in 1949, the process of marketization of the entire system of transfer of the right to use mineral resources in China has been divided into the following four stages.

The first stage (from the founding of the People's Republic of China until 1995): the state provided the rights to use mineral resources free of charge, while prohibiting free trade in such rights. Important regulations at this stage are the provisional rules of the People's Republic of China "On the Mining Industry" of 1950, the Law of the People's Republic of China "On Subsoil" of 1986.

The second stage (from 1996 to 2001): a system of paid acquisition of mining rights was established. At this stage, legal relations were regulated by the following regulations: the Law of the People's Republic of China "On Subsoil" as amended in 1996, the administrative act "On Registration of Mineral Exploration Sites" in 1998, the administrative act "On Registration of Mineral Development" in 1998.

The third stage (from 2002 to 2012): the formation of the market for the transfer of mining rights. At this stage, the legal relations were regulated by the following regulations: the administrative act "On bidding, auctions and listing of rights to exploration and Extraction of minerals" in 2003, the notification "On further regulation of the management of the transfer of mining rights" in 2006, the notification "On the creation and improvement of the material market of mining rights" in 2010.

The fourth stage (from 2013 to the present): comprehensive development of a market system for the transfer of rights to the extraction of minerals. This stage was marked by the adoption of the following normative legal acts: the plan "Reforming the system of ecological civilization" in 2015, the rules of "Trade in mineral extraction rights" in 2017, the plan "Reform of the system of mineral equity funds" in 2017, the plan "Reform of the system of transfer of the right to use the subsoil" in 2017.

Considering the process of reforming the market system for the transfer of subsoil use rights in China, it can be noted that the transfer of subsoil use rights has moved from free transfer to paid acquisition, and the management method has gradually changed from a state administrative monopoly to a combination of state administrative regulation and market competition, and then gradually to a market distribution of resources[14, P2-4].

As for the market-oriented reform of the transfer of subsoil use rights, before the creation of the national pipeline company to liberalize the oil and gas market, three Chinese large state-owned oil and gas companies monopolized almost all the rights to use natural gas subsurface areas in China and the main transportation network and the main LNG terminal.

Thus, three large state-owned oil and gas companies can independently determine the volume of production, thereby controlling the supply of raw materials (goods) to the city gas company. It is almost impossible for urban gas companies to choose alternative suppliers of raw materials for natural gas. According to this model, the advantage of owning subsoil use rights is almost equivalent to the competitive advantage of owning the entire natural gas supply chain. As a result, the security risk of natural gas supplies throughout the country has significantly increased[15].

We believe that by ensuring full competition for all types of capital in the field of subsurface exploration and infrastructure operation, fair competition can be ensured, and then the security of natural gas supplies can be guaranteed.

It is worth noting that the National Pipeline Networks Company (PipeChina) was established in December 2019. This company is mainly engaged in investments, construction and operation of the infrastructure of the oil and gas trunk pipeline network in order to ensure fair access to infrastructure for all users. 

Sometimes state-owned enterprises get the right to use the subsoil, but do not produce. For example, the state oil and gas company received the right to explore an oil site for 19 years. Due to the low cost of oil and gas companies that own the rights to use the subsoil, they monopolize oil and gas fields, but do not exploit them. This also indirectly threatens the security of domestic oil and gas supplies [16, p. 24-25].

To address this issue, the project "Reform of the system of transfer of the right to use the subsoil" was created (published in June 2017), which provides that the competitive transfer of mining rights will be comprehensively promoted, institutions of bidding, auctions and listing will be introduced, and the transfer of the rights to use the subsoil by agreement with the state (non-competitive basis of transfer rights) must be strictly limited.

Already in August 2017 The Department of Land Resources of Guizhou Province held the first open auction for the transfer of the right to use subsoil for oil and gas exploration – "The right to explore for Zhengan shale gas" in China. In December 2017, the Ministry of Land and Natural Resources of the People's Republic of China published an announcement on the public sale at auction of five sites for oil and gas exploration in Xinjiang.

The essence of a fair distribution of the right to use subsurface areas is to transfer the rights to use subsurface areas through competitive market institutions and fully utilize the decisive role of the market in the allocation of resources.

Comparing the Russian rules for the transfer of the right to use subsoil plots, it is necessary to pay attention to Article 12.1 of the Federal Law "On Subsoil". According to this article, there are two situations when a subsoil use license is subject to renewal: the transfer of the right to use a subsoil plot in accordance with Article 17.1 of this law, the transfer of the right to use a subsoil plot on the basis of a production sharing agreement. That is, in the Russian Federation there is no mechanism for the mandatory withdrawal of the right to use subsurface areas. This will obviously strengthen the further monopoly of state oil and gas companies in the field of oil and gas exploration and production.

2. The adoption of the law on foreign investments and the definition of national strategic mineral resources.

2.1 Adoption of the Law on Foreign Investments

Since 1992, China has become a developing country that has attracted the largest number of foreign investments for 27 consecutive years, Chinese enterprises with foreign investments account for less than 3% of the total number of enterprises in China, but they have created almost half of China's foreign trade volume.

In order to further expand the degree of openness, actively promote foreign investment and protect the legitimate rights and interests of foreign investors, the law "On Foreign Investment", which entered into force on 01.01.2020, replaced three existing Chinese laws regulating the activities of enterprises with foreign capital, namely: the Law of the People's Republic of China "On Joint Ventures with Foreign Capital" 1979 The Law of the People's Republic of China "On Foreign Investment Enterprises" of 1986, the Law of the People's Republic of China "On Chinese-Foreign Cooperative Enterprises" of 1988, and became the main and fundamental legal document regarding foreign investment. It also became a landmark event in the large-scale deepening of reforms aimed at China's open market policy[17, P.57].

The main content of this law is to provide for measures to "promote" and "encourage" foreign investment. For example, in the content of the law, the second chapter is called "Investment promotion", the third chapter is called "Investment protection", and the fourth chapter is called "Investment Management".

Prior to the promulgation of the law "On Foreign Investment" and "Special Administrative Measures for Foreign Investment Access" in 2019, the participation of foreign investors in the exploration and production of oil and gas resources in China was severely limited, and could only be carried out by signing a production sharing agreement with several Chinese state oil and gas companies[18].

In general, the current law "On Subsoil" also does not restrict the access of foreign investments in the field of mineral resources extraction. On the contrary, based on the provisions of Articles 4 and 5 of the law "On Foreign Investment" of 2020, we can draw the following conclusions: the Chinese government applies a national pre-admission regime for foreign investment in the oil and gas industry and even encourages and protects foreign investment in oil and gas exploration and production.

In the sphere of subsoil use in the field of oil and gas production, direct participation of foreign capital in investments is allowed. This indicates that China's oil and gas industry has fully opened up to the outside world [19, P. 58-62].

Some Chinese scientists also believe that giving foreign investors the opportunity to independently enter the field of oil and gas exploration and production in China helps the state to explore and extract oil and gas resources. This measure to open the market is of great importance for ensuring national security of oil and gas supplies [20, P.12].

It should be noted that the law "On Foreign Investments" introduced the concept of national security in the field of foreign investments through the provisions of Article 35: "The State establishes a system for verifying the security of foreign investments and conducts a security check of foreign investments that affects or may affect national security." If the definition of national security is based on article 2 of the Law "On National Security", then the National Security Review of foreign investments will adopt an expanded interpretation covering national security, national public policy and environmental protection. As a result, the requirements for the protection of national security will be met.

2.2 Definition of national strategic mineral resources.

National strategic security of natural resources is a subordinate concept of national security of resources. International political relations between countries and the diplomatic position of each country have an important influence on the definition of national strategic security of resources [21, P.4]. Oil and natural gas are considered national strategic mineral resources in both China and Russia.

The measures taken by the Chinese Government to attach importance to the country's strategic mineral resources and their protection can be summarized in the following three aspects:

1. Positive changes in the legal status of national strategic resources. Article 22 of the Law "On Subsoil" (revised draft – 2019) provides that if important mineral resources identified by the State Council, or mineral resources in other marine areas, except for territorial waters under the jurisdiction of the PRC, then these subsoil use rights are transferred by the State Council. Strict protective measures are also being taken. Article 44 of the Law "On Subsoil" (revised draft – 2019) specifically states that persons who develop important minerals without permission are subject to more severe punishment.

2. In accordance with Article 21 of the Law "On National Security", the State effectively controls the development of strategic resources and energy, strengthens strategic reserves of resources and energy, as well as improves the construction of strategic transport channels of resources and energy and takes measures to ensure security.

3. For the first time, 24 types of minerals were included in the list of strategic minerals, such as oil, natural gas, shale gas and coal seam gas.

However, one of the shortcomings of Chinese legislation is that neither the existing nor the law "On Subsoil" being developed, nor the law "On National Security" define the concept of national strategic mineral resources.

In accordance with Article 2.1 of the Federal Law of the Russian Federation "On Subsoil", it is provided that, in order to ensure the defense of the country and the security of the state, certain subsurface areas belong to subsurface areas of federal significance. These individual subsurface areas include, but are not limited to: a field with recoverable oil reserves of 70 million tons; with gas reserves of 50 billion cubic meters, etc.

Article 4.2. of the Federal Law of the Russian Federation "On Foreign Investments" provides for exclusions of a restrictive nature. For foreign investors, restrictions may be established by federal laws only to the extent necessary in order to protect the country's defense and state security, etc. For example, Article 6 of the Federal Law "On the Procedure for Foreign Investments in Business Entities of Strategic Importance for Ensuring the Country's Defense and State Security" provides that the type of activities of strategic importance for ensuring the defense of the country and the security of the state, including item 39 (geological exploration of the subsoil and (or) exploration and extraction of minerals in the subsoil areas of federal significance).

3. China's environmental protection legal system and environmental resource protection reform in mining areas.

3.1 Reform of the legal system of environmental protection in China.

China's environmental legal system has established a relatively complete legal system based on the Constitution, headed by the law "On Environmental Protection", with a separate law "On the Environment" as the basis, and supplemented by other administrative regulations. The content of this system is mainly divided into three areas: pollution prevention, environmental protection and resource use.

Before the 2018 reform, there were not enough provisions on the restoration of strategic reserves of resources. The shortcomings of environmental law are much more serious than it seems. In 2018, after the environmental policy was included in the "Amendment to the Constitution of the People's Republic of China", the functions of the law "On Environmental Protection" expanded from the legal function of pollution prevention to ensuring national environmental safety and resource security.

Comparing the relevant Russian legislation in the field of environmental protection, we found that the Russian law "On Environmental Protection" not only comprehensively regulates environmental safety, but also very early, back in 2002, defined environmental safety. Article 1 of the Federal Law "On Environmental Protection" provides that environmental safety is the state of protection of the natural environment and vital human interests from the possible negative impact of economic and other activities, natural and man–made emergencies, and their consequences.

3.2 Environmental resource protection reform in mining areas

China 's legal provisions on environmental compensation can be divided into three stages:

The first stage (from 1978 to 2004) was the initial stage of the auxiliary policy on environmental protection. At this stage, the following Laws and regulations were promulgated: the Law of the People's Republic of China "On Environmental Protection" of 1979, the Law of the People's Republic of China "On Forests" of 1979, the Law of the People's Republic of China "On Forests" of 1984, the Law of the People's Republic of China "On Pastures" of 1985, the Law of the People's Republic of China "On Subsoil" of 1986, the Law of the People's Republic of China "On Water" in 1988, the Law of the People's Republic of China "On Environmental Protection" in 1989.

The second stage (from 2005 to 2011) was the stage of the formation of "beneficial compensation" as a guiding principle. At this stage, the following regulatory legal acts were published: the guiding conclusions "On the phased creation of a mechanism of responsibility for the management of environmental protection activities of mines and environmental restoration" in 2006, the guiding conclusions "On the conduct of pilot works on environmental compensation" in 2007, the management of "Compensation Funds for forest environmental benefits" in 2007, measures "On transfer payments (pilot project) for key national ecological functional zones" 2009, the Law of the People's Republic of China "On Soil and Water Conservation (revised in 2010).

The third stage (from 2012 to the present) is the stage of improving the compensation system for environmental protection. At this stage, the following Laws and regulations were promulgated: measures "To manage the collection and use of compensation fees for soil and water conservation" in 2014, the Law of the People's Republic of China "On Environmental Protection" in 2014, the conclusions of the "Main Directorate of the State Council on Improving the mechanism of compensation for environmental Protection" in 2016, the guiding conclusions of the Ministry of Finance "On the creation of and improving the long-term mechanism of compensation and environmental protection in the Yangtze River Economic Belt" 2018

The extraction of oil and gas resources destroys the original geology and hydrology of the production area and becomes one of the main factors affecting the ecological environment of oil and gas production areas.

Since groundwater pollution is latent, and the effect is delayed and irreversible, it can be said that once the groundwater has been contaminated, the pollution will continue for a long time, the contaminated area is large and difficult to restore. The United States is the most successful country in shale gas production, but the hydraulic fracturing technology used still seriously pollutes groundwater resources in the mining area.

In the Fuling Shale Gas National Development Demonstration Zone in China (the gas field is the largest shale gas field in the world outside the United States), the development of a gas field continues to have a negative impact on the local environment and causes environmental damage, provided that the gas field is operated in accordance with the requirements of "green production" established by the National Administration power engineering [22, PP.7-9].

Oil and gas spills in the sea also have a serious impact on environmental safety. For example, in 2011, when CNOOC and ConocoPhillips jointly operated oil and gas fields, an oil spill occurred at the Penglai 19-3 field in Bohai Bay, causing serious pollution of 870 square kilometers of seawater.

Similar cases of contamination of mining territories are often found in Russia. The number of "abandoned" wells is growing, and they pose a serious threat to both the environment and people's lives, due to the fact that the legal regulation of the conservation or liquidation of wells is insufficiently regulated at the legislative level [23, pp.108-111].

In order to strengthen the rights and legitimate interests of the state as the owner of mineral resources and promote environmental protection and rational use of resources, from 2014 to 2019, China carried out legislative reforms in the following three aspects: the adoption of the law "On the Protection of Water and Soil Resources", the introduction of a system of shared funds of mineral resources and the creation of a new version of the law "About the bowels."

In May 2014, the Ministry of Finance and the National Development and Reform Commission published "Administrative measures for the use of compensation fees for the protection of water resources and soils", which provides for a nationwide unified and applicable system of compensation fees for water and soil protection.  Further, the Law of the People's Republic of China "On Soil and Water Protection" clearly defines the compensation fee for soil and water conservation as functional compensation, and not compensation for economic losses caused by soil erosion[24, P.1].

 In April 2017, the State Council published the "Reform of the system of shared funds of mineral resources" (Go Fa 2017). № 29). Changes were proposed to six types of taxes and fees on minerals that existed in three links (transfer, exploration and extraction of mineral rights) before the reform to four types of taxes and fees on minerals that existed in four links (transfer, exploration, extraction of mineral rights and management of mining environment and recovery).

Further, (1). when transferring the rights to extract minerals, the value of the right to explore and the right to extract minerals are combined into income from the transfer of the right to use subsoil plots; (2). in the process of using the rights to extract minerals, royalties for exploration rights and mineral extraction rights are included in payment for the rights to use subsurface plots; (3). in mining, the compensation fee for subsurface use is included in the resource tax; (4). after the reform, income from the transfer of the right to use subsurface plots and payment for the rights to use subsurface plots will be included in the management of the general state budget and will be used for environmental protection expenses environment, such as geological research and environmental protection and restoration of mines[25, P. 47].

It should be noted that some Russian scientists also believe that due to the compensatory nature, the mineral extraction tax (its legal nature is similar to the tax on resources after the reform in China) is not a tax, but a fee in Russia, so it is necessary to return the MET to the nature of the royalty payment to the owner of the resource for its use[26, p.32].

As discussed in Part 1.1 above, in the Law "On Subsoil" (revised draft 2019), Chapter 4 "Mining" was changed to "Ecological restoration of mining areas" to emphasize the importance of environmental safety.

For example, Article 33 "Owners of mining rights engaged in exploration and extraction of minerals must take the necessary measures to minimize the impact on natural geographical features, groundwater and other ecosystems", article 34 "The State establishes an environmental restoration system for mining areas", article 35 "Owner of mining rights mineral resources should withdraw funds for the ecological restoration of mining areas in accordance with a certain share of sales revenue, which should be specifically used for the ecological restoration of mining areas and should be included in the cost of the enterprise."

The Law "On Subsoil" (revised draft 2019) fully reflects China's current needs in ensuring the safety of resources and protecting environmental safety. That is: "the preservation of national ownership of mineral resources and the observance of the legitimate rights and interests of owners of mining rights, ensuring the security of national resources and promoting the construction of ecological civilization" are the main priorities. The State strives to find the perfect balance between the use of resources and the protection of minerals.

As a result, this article summarizes the experience and shortcomings of Russia and China in ensuring a balance between national resource security and environmental security with the achievement of "carbon-neutral" goals. A number of useful conclusions of a theoretical and practical nature are made. Based on the fact that China and Russia maintain their respective resource and environmental security, China should learn from Russia and transform lower-level administrative provisions related to resource protection and environmental security into laws in order to strengthen its enforcement, enforcement and deterrent powers.

Comparing and analyzing the similarities and differences between China and Russia in the field of legislation on the use of mineral resources, we summarize the experience and shortcomings of China and Russia in maintaining national energy security in this area. This experience can be of great benefit to Chinese and Russian scientists, and have a certain reference value when resolving the issue of mutual investments between the two sides in this area.

 

 

 

 

 



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