RIA Novosti: Prosecutors threaten BP venture with Siberia license revocation – 1

25/09/2006 21:11 (Recasts paragraph 2, adds paragraphs 4-9)

MOSCOW, September 25 (RIA Novosti) – Russian prosecutors issued a warning Monday that a BP joint venture operating in East Siberia could have its license revoked if it fails to address environmental protection and other problems.

The Prosecutor General’s Office said Rusia Petroleum [RTS: PTRL], majority owned by Russian-British joint venture TNK-BP, had failed to comply with legislation on the use of natural resources and environmental protection, as well as with the terms of its license agreement on the development of the Kovykta gas field, in the Irkutsk Region.

In the event of further non-compliance, the company will have its license revoked, a statement from the office said.

Under Russia’s natural resources legislation, companies licensed to develop a deposit should ensure the protection of social, economic, environmental and other interests of local communities. In Rusia Petroleum’s case, “this provision is not complied with, resulting in an infringement on the state interests of the Irkutsk Region and on the rights of its citizens,” the statement said.

Specifically, Rusia Petroleum committed itself to supplying the region with 9 billion cubic meters of natural gas a year from 2006. But, according to prosecutors, the company has failed to meet this commitment so far.

TNK-BP owns a 62.4% stake in Rusia Petroleum; 25.82% belongs to financial industrial group Interros, and the Irkutsk regional government holds the remaining 11.24%.

The Kovykta gas field, one of the largest in East Siberia, has 1.9 trillion cubic meters of proven reserves. It is highly important to the Russian government, which is pursuing an ambitious project to build a gas pipeline network to meet the needs of some Asian nations, primarily energy-hungry China, and to diversify its export destinations.

The prosecutor office’s move comes against the backdrop of a decision made by the Natural Resources Ministry last week to annul its approval of an environmental study on the Shell-led Sakhalin II energy project off Russia’s Pacific coast, which could jeopardize the start to supplies to Japan of liquefied natural gas slated for 2008.

Russian energy giant Gazprom had been in negotiations with Royal Dutch Shell over swapping a stake for a share of another energy project in northern Russia, but pulled out of the talks. Gazprom, which was appointed in 2001 to coordinate all gas projects in East Siberia and Russia’s Far East, has also been in talks with TNK-BP on a role in the Kovytka deposit.

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