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RIA Novosti: Russia’s financial watchdog to probe Kharyaga project next year-1

16:21 | 13/ 10/ 2006 

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MOSCOW, October 13 (RIA Novosti) – Russia’s financial watchdog is planning to look into the production-sharing agreement on the Kharyaga oil field in northern Russia next year, the head of the Audit Chamber said Friday.

The Kharyaga deposit, which is being developed by the French oil major Total, has been the focus of attention for Russian authorities this year, which question how well the project is being implemented.

“It [the inspection] will be carried out next year,” Sergei Stepashin said.

The Natural Resources Ministry announced in late September it would launch probes into the Kharyaga project and the Kovykta gas project in East Siberia, developed by the Russian-British venture TNK-BP.

“We will conduct probes into the Kovykta and Kharyaga deposits for compliance with licensing norms and environmental standards according to the timetable,” Minister Yury Trutnev said.

But on Thursday, the minister said no action was being taken to revoke Total’s license. “Just as with regard to other subsoil users, this is absolutely routine work related to overseeing the implementation of licensing agreements,” he said echoing President Vladimir Putin, who said in France in late September that rumors of Total’s license revocation were exaggerated.

In April, the Natural Resources Ministry accused Total of failing to meet its targets for Kharyaga under a 1995 production-sharing agreement. It said the investor failed to increase production of crude and introduce new technologies and equipment for effective production since the agreement came into force in 1999.

Ministry experts warned that the situation could result in losses for Russia, as the country “will have to continue sending the entire deposit’s output to the investor in compensation for its expenses.”

Total owns a 50% stake in the Kharyaga project, alongside Norway’s Hydro (40%) and Russia’s Nenets Oil Company (10%).

The ministry’s decisions with respect to the two deposits came following a move to annul the approval of an environmental study on the Shell-led Sakhalin II energy project off Russia’s Pacific coast. Sakhalin II’s oil and gas fields are being developed under another PSA.

Russian energy giant Gazprom was in talks with Royal Dutch Shell over swapping a Sakhalin II stake for a share block in another energy project in northern Russia, but pulled out of the talks. Gazprom has also been in talks with TNK-BP on a role in the Kovytka deposit.

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