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MosNews: Russia Launches Checks of TNK-BP Fields

Mos News Story BP

Created: 19.01.2007 12:24 MSK (GMT +3), Updated: 12:24 MSK

Russian authorities have stepped up pressure on British-Russian oil venture TNK-BP, as the Natural Resources Ministry said it was launching checks into whether the company was fulfilling terms of use on Kovykta gas field, one of its biggest assets.

The move had been signaled by the Russian authorities last year, but comes amid speculation that Moscow may pressure BP PLC to cede some of its 50 percent stake in the joint venture, handing control to the Russian side, the article added.

Some analysts interviewed by the Financial Times have speculated Russia may seek to take advantage of the discomfiture of Lord Browne, the BP chairman who was an architect of the venture in 2003, but who announced last week he would step down 18 months earlier than planned.

The Russian probe follows last month’s deal by Royal Dutch Shell PLC and two Japanese partners to sell a controlling stake in the $20 billion Sakhalin-2 project to Gazprom, the Russian natural gas giant.

Russian analysts point out that if Natural Ministry’s checks discover violations at Kovykta gas field, the British-Russian venture will have several months to negotiate agreement with Gazprom, so that the gas giant joins in the development of Kovykta’s gas reserves. If Gazprom gets a stake in the project, all of the checks are likely to stop, just like it happened with Sakhalin-2.

Related MosNews Report: Russian Prosecutors Seek to Rid TNK-BP of All Gas Production Licenses

Created: 08.11.2006

Russian prosecutors are seeking to annul licenses to develop major gas fields that are held by Russian-British oil venture TNK-BP, according to an official statement posted late Tuesday, 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 website said that 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. She also told Russian business daily Vedomosti that the company’s management has not yet decided how to replay to the accusations from the prosecutors.

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.” Another analyst, quoted by Vedomosti, said that the Prosecutor Generals’ move could force the Russian shareholders of TNK-BP to sell their stakes, presumably to state-controlled gas giant Gazprom.

Rosnedra said it had not yet taken a decision to formally consider the 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 said.

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