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Petroleum News: Prosecutors file to cancel BP licenses

Week of November 12, 2006

Russian prosecutors are seeking to annul licenses held by BP PLC’s Russian joint venture to develop major gas fields, according to an official statement posted Nov. 7.

The move marks the latest step against foreign interests in the Russian oil and gas sector, where the Kremlin is actively increasing its control.

The statement posted on the Prosecutor General’s Web site said prosecutors had sent a letter to the federal subsoil agency Rosnedra asking for the licenses to the Novo Urengoyskoye and Vostochno-Urengoyskoye gas fields to be revoked due to environmental and licensing violations. The licenses are held by the Rospan International unit of TNK-BP, which is owned jointly by BP and a group of Russian billionaires.

“We are not aware of any legal violations committed at Rospan,” TNK-BP spokeswoman Marina Dracheva was quoted as saying by Dow Jones Newswires.

TNK-BP’s license to develop the massive Siberian Kovykta gas field has also come under threat over complaints of violations similar to those made against Rospan International. While the announcement served to turn up the pressure on TNK-BP, analysts noted that a decision to revoke the license would be unprecedented.

“The investment environment has become less friendly to foreigners in the oil and gas sector over the last two years,” Dmitry Loukashov, an analyst with Moscow’s Aton investment bank, was quoted as saying by Dow Jones Newswires. Loukashov noted, however, that “there are no precedents of enforced license revocations.”

Rosnedra said it had not yet taken a decision to formally consider revoking the license. At the next stage the company would be given three to six months to resolve the problems at the fields before the licenses could be annulled, a spokesman told Dow Jones Newswires.

—The Associated Press

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