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Russia possesses vast natural resources but does not always make intelligent or responsible use of them, said President Putin as he opened the meeting.

The President declared himself in favour of synchronising the interests of government and business in subsoil use, which, he said, required an appropriate economic mechanism.

Among core problems President Putin mentioned the reduced amount of geological prospecting and the lack of new deposits ready for mining. It was necessary, he said, to find out why the major oil companies were not investing in new fields.

President Putin also drew attention to the inadequacy of the legal framework. The principles of licensing, he said, did not work properly – only 54% of hydrocarbon license holders were fulfilling their agreements.

The President indicated that nine ministries and government departments were running the sector in Russia, which often led to priority being given to narrowly departmental, rather than national interests. In addition, he said, a bitter controversy was raging over who owned the subsoil – the federal centre or the regions.

The President said that Russia was beginning systematic work to formulate a state policy on subsoil use, nature management and use of raw materials. As regards land tenure, the problem was so acute that the State Council should discuss it separately, he said.

Another issue taken up was the possible change of the unified tax on businesses, introduced at the beginning of the year. The President said he had already raised the matter with the Cabinet and intended to personally oversee it.